Ibiden, a Japan-based IC substrate manufacturer, has highlighted a slower-than-anticipated rebound in the global demand for IC substrates. Despite this, there's a glimmer of hope on the horizon as the strong demand for server boards propelled by AI servers and AI chips offers a promising outlook for the company.
According to reports from Nikkei and Nikkan Kogyo, Ibiden President Takeshi Aoki stated due to the prolonged downturn in the global IT device market, the anticipated recovery in IC substrate demand, initially expected in the first half of fiscal year 2024 (April 2024 to March 2025), is now forecasted to be delayed until the second half of the fiscal year of 2024 or even the fiscal year of 2025.
Amidst the challenging market conditions, Ibiden has postponed the operation of its planned Gama plant in Ōgaki, scheduled for the fiscal year of 2024, to the fiscal year of 2026. Additionally, Ibiden's plan to increase its substrate production capacity to 2.1 times that of the fiscal year 2019 target by fiscal year 2025 has also been put on hold.
However, Ibiden sees a growing demand for server boards driven by AI servers, unlike standard servers. The company anticipates that the demand for boards used in AI servers, particularly for generative AI applications, will continue to expand.
Due to the high demand for generative AI, the Ono factory, capable of producing various boards, will commence operations as scheduled in fiscal year 2025, taking over some of the production originally planned for the Gama plant. The dedicated production line for AI server boards will be introduced to the Ono plant.
President Takeshi Aoki emphasized that Ibiden secures nearly all orders for high-end generative AI server IC boards. These boards are primarily supplied to Nvidia GPUs manufactured by TSMC.
Currently, Ibiden commands over 50% of the market share in server (including AI and standard) IC boards, surpassing other board manufacturers such as Shinko Electric and AT&S.
Furthermore, President Takeshi Aoki estimates that the sales volume of IC boards related to generative AI, measured by board area, will triple in fiscal year 2024 compared to fiscal year 2023.
Future outlook
Since IC boards required for generative AI are high-value-added products, the growth rate in sales revenue is expected to be even higher. The revenue contribution of generative AI in IC board sales is projected to exceed that of other areas (standard servers, PCs, etc.) in the near future.
The server market is rapidly evolving, with Ibiden predicting a 40% growth in related areas by 2027. While PC board usage will slightly decrease, standard server board usage is expected to grow by 30%. However, the most significant growth is anticipated in the AI server board segment, which, despite contributing almost no revenue in 2022, is expected to account for nearly 30% of the overall server board revenue by 2027.
President Takeshi Aoki noted that the IC boards used in AI servers are technically similar to those used in standard servers but differ in the larger computational requirements of AI servers.
Ibiden is intensifying its efforts in developing next-generation boards, including those for 3D packaging. To achieve this, Ibiden has joined the TSMC-led alliance "TSMC 3DFabric Alliance" and will leverage the Taiwan-based giant's Open Innovation Platform (OIP) ecosystem and 3Dblox standards to increase the production capacity of IC boards required for advanced process chips to ten times that of the existing capacity.
