Samsung Electro-Mechanics has sold out its semiconductor substrate inventory for two years.
The capacity utilization rate of semiconductor packaging substrates continues to rise. With the sharp increase in demand during the era of artificial intelligence (AI), it is expected that within the next two years, the capacity for the next generation of substrates— Flip Chip Ball Grid Array (FC-BGA)— will be essentially sold out.
According to Samsung Electro-Mechanics’ quarterly report released on December 24, the capacity utilization rate for its FC-BGA packaging business reached 72% in the third quarter, showing a steady increase from 63% in the first quarter and 68% in the second quarter of this year. Industry insiders revealed that the capacity utilization rate of Samsung Electro-Mechanics’ FC-BGA production line is nearing its peak.
FC-BGA substrates are high-density packaging substrates used to connect highly integrated semiconductor chips to the motherboard. They are responsible for reliably supplying power and transmitting signals to micro semiconductor chips. In particular, artificial intelligence and high-performance computing (HPC) servers require FC-BGA substrates that can accommodate a large number of chips and have a high number of layers. The production of these large-area, multi-layer FC-BGA substrates is challenging and often comes at a high price.
Due to the enormous demand for FC-BGA, Samsung Electro-Mechanics is increasing its capacity utilization. It is expected that Samsung Electro-Mechanics will expand its supply range for FC-BGA from existing customers like Amazon and AMD to new clients including Google and Broadcom. Securities analysts estimate that Samsung Electro-Mechanics’ FC-BGA capacity will be nearly “sold out” before 2027. Future Asset Securities researcher Park Jun-seo stated: “ (Samsung Electro-Mechanics’) FC-BGA capacity will be nearly exhausted before 2027.”
Samsung Electro-Mechanics is the only company in South Korea that mass-produces FC-BGA chips for servers. The company stated in its third-quarter financial report: “Since fully supplying AI accelerator substrates from the second quarter, we expect FC-BGA sales to reach a record high this year,” and “next year we will continue to achieve double-digit sales growth by expanding to new customers.”
Samsung Electro-Mechanics is committed to optimizing its business structure, diversifying its business portfolio from a previous focus on IT products to artificial intelligence and automotive applications. In the context of the expanding AI market and ongoing infrastructure investments, the company aims to compete with high-value-added products that surpass general products.
PCB Substrates, Strong Demand
Additionally, PCB substrates are also experiencing growing demand driven by AI.
Recently, companies like Huadian Co., Ltd. and Shengyi Electronics released their third-quarter reports for 2025. The reports show that Huadian Co., Ltd. achieved an operating income of 5.019 billion yuan in the third quarter, a year-on-year increase of 39.92%; net profit was 1.035 billion yuan, a year-on-year increase of 46.25%. Shengyi Electronics reported third-quarter revenue of 3.060 billion yuan, a year-on-year increase of 153.71%; net profit was 584 million yuan, a year-on-year increase of 545.95%.
Huadian Co., Ltd. stated in its financial report that the increase in operating income is mainly due to the structural demand for printed circuit boards from emerging computing scenarios such as high-speed computing servers and artificial intelligence.
Moreover, leading PCB companies like Dazhu CNC and Shenghong Technology have recently disclosed their third-quarter financial reports or performance forecasts, all showing growth in both revenue and profit in the third quarter. Overall, with the increasing demand for high-end printed circuit boards driven by AI computing power and AI servers, the PCB industry is entering a significant development opportunity period.
PCB is known as the “mother of electronic products,” mainly composed of copper-clad laminates (CCL), copper foil, fiberglass cloth, resin, and other chemical materials. With the explosive demand for AI computing power, the PCB industry is also riding the fast track of AI.
According to TrendForce, approximately 1.2 million AI servers were shipped globally in 2023, and this number is expected to exceed 2.1 million by 2025.
In the next five years, AI systems and servers are expected to continue driving PCB demand growth. Prismark data shows that the PCB market size for global AI/HPC server systems (excluding packaging substrates) is close to $800 million in 2023, and by 2028, the PCB market size for AI/HPC server systems (excluding packaging substrates) will catch up with that of general servers, reaching $3.17 billion. The compound annual growth rate from 2023 to 2028 is expected to be 32.5%, far exceeding the growth rate of PCB market sizes in other fields.
“AI share” is becoming a key driver of growth for many PCB companies and influences industry competition. The technical requirements for AI PCBs, such as more layers, larger hole diameters, and more precise back-drilling processes, are pushing competition in the PCB field into a new stage, with expansion and research and development becoming industry keywords.
A trend is that leading PCB companies are rapidly increasing their R&D spending. Financial reports show that in the first three quarters of 2025, Huadian Co., Ltd. invested 792 million yuan in R&D, a year-on-year increase of 37.25%; Shengyi Electronics’ R&D investment was 132 million yuan, a year-on-year increase of 59.7%. Previously disclosed data from Shenghong Technology also showed that R&D investment in the first three quarters reached 608 million yuan, a year-on-year increase of 84.43%; Dazhu CNC’s R&D investment reached 254 million yuan, a year-on-year increase of 45.21%.
AI is driving the PCB industry towards higher layers, finer wiring, and higher reliability, placing higher demands on processing technology.
The multi-layer board market is one of the most fiercely competitive red ocean markets, with a strong industry need for cost-reducing and efficiency-enhancing processing solutions. With the rapid increase in data volume, AI servers and high-speed switches require higher layers and higher density high-speed multi-layer boards to support them. To ensure the signal integrity of high-speed PCBs, higher requirements are placed on holes, lines, and product quality. The urgency to break through the technical bottlenecks of PCB manufacturers and AI server industry chain terminal customers is continuously rising, and innovative technological advantages are becoming key to industry competition.
China International Capital Corporation mentioned that compared to traditional servers, the number of layers in AI server PCBs has jumped from 8-16 layers to over 20 layers, requiring the use of ultra-low loss materials and precision back-drilling, resin plug hole processes, etc. Therefore, the market demand for high multi-layer boards (over 20 layers) and high-end HDI PCBs is increasingly intensifying.
Source: Semiconductor Industry Review
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