AI demand pushes global ABF substrate market into shortage through 2028

The global market for ABF (Ajinomoto Build-up Film) substrates is projected to remain in shortage through 2028. This scarcity is primarily driven by the robust and increasing demand for artificial intelligence (AI) hardware, which relies heavily on these specialized materials for high-performance chips. The current supply cannot keep pace with the rapid expansion of AI technologies.

This prolonged shortage matters because ABF substrates are essential components in packaging high-end processors, including CPUs, GPUs, and AI accelerators. A sustained lack of these substrates could lead to significant disruptions in the production schedules for various technology companies. It also signals strong, ongoing investment and expansion within the AI sector.

The mechanism behind the shortage involves the manufacturing process of advanced semiconductors. ABF film is used as an insulating layer in the build-up process of substrate manufacturing, enabling the creation of increasingly dense and powerful chips. Expanding ABF substrate production capacity is a complex, capital-intensive, and time-consuming process, contributing to the persistent supply-demand imbalance.

This situation primarily impacts semiconductor manufacturers and AI hardware developers. Companies like Intel (INTC), AMD (AMD), and Nvidia (NVDA), which design chips requiring ABF substrates, could face production timeline challenges. Contract manufacturers like TSMC (TSM) and substrate suppliers such as Unimicron and Ibiden may see increased pricing power but also pressure to expand capacity.