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A major provider of chip package substrates for Nvidia (NASDAQ:NVDA), Japan's Ibiden is investigating quick production increase to satisfy growing demand driven by artificial intelligence applications, Bloomberg News reported. According to Ibiden CEO Koji Kawashima, artificial intelligence-related substrate sales are strong; present supply cannot match consumer demand including Nvidia's innovative GPUs. "Our clients have questions," Kawashima added, pointing up continuous talks on additional capacity increases. Beginning at 25% capacity in Gifu prefecture, the company's new substrate facility is expected to scale to 50% by March 2026. Still, Kawashima admitted, this might not meet demand.
For its powerful GPUswhich run AI servers Nvidia mostly depends on substrates to allow electrical communication. Ibiden's expansion delays might limit Nvidia's capacity to use its AI leadership, particularly as rivals including Marvell Technology, Broadcom, and industry behemoths Microsoft and Google develop more competitive solutions. Although Ibiden also provides Intel (INTC), Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing (TSM), Nvidia's reliance on Ibiden to keep market supremacy in AI-driven technologies is highlighted by its need for specialized, heat-resistant substrates.
This article first appeared on GuruFocus.