As the semiconductor industry is booming, the substrate has become the brightest star in the global PCB industry. However, since 2022, the unfavorable factors, such as high inflation, high inventory level, Russia Ukraine War, low demand and so on, have resulted in its low growth rate. The demand for ABF substrates has driven the output of the global substrates to US$ 17.84 billion, up 8.9% compared to that of 2021. After an inventory adjustment in 2023, it is estimated that the global substrate market will slightly decline by 3.3% to US$ 17.24 billion.

Benefiting from the demand for HPC and advanced packaging, ABF substrates continue to grow
        Depending on the electric connection and transmission between the on-board chips on the IC substrate and traditional PCB, “substrates” vary. They can be divided into the BT (Bismaleimide Triacine) and ABF (Ajinomoto Build-up Film) categories. The former is widely used for the AP (application processor), BB (baseband), RF (radio frequency module) on the phone, followed by the memory products, including DRAM, NAND, etc. The latter is widely used for CPU and GPU for networking, servers, and computers.
        According to IEK, ITRI, it is estimated that the output of the global substrate market has reached US$ 17.84 billion, up 8.9% compared to that of 2021, where the output of BT substrates reaches US$ 8.18 billion, down 6.3% yoy, while the output of ABF substrates is about US$ 9.66 billion, up 26.1% yoy. The advanced analysis shows that the high inflation of 2022 resulted in a slump in the demand of the consumer market, so the demand for BT substrates remained weak in the markets of the phone, PC and memory. However, the ABF substrates still have high growth momentum because of high semiconductor demand for 5G, HPC, AI and automotive electronics.
        Looking to 2023, as the consumer market will remain weak, which leads to slow destocking of inventories and is unfavorable to the recovery of BT substrates, it is expected that it will decline by 9% with an output of US$ 7.44 billion; the demand for AI HPC and Chiplet advanced packaging technology have been the main factors that have driven the growth of ABF substrates in recent years. This drives manufacturers of substrates to raise their capital expenditure and actively expand their production capacities. While the demand is temporarily reducing, manufacturers are still planning to increase production. The global production capacities of ABF substrates will be increased again. With the decreasing demand in 2023, the demand and supply of the ABF substrate market may remain balanced, or supply may be greater than demand. Nevertheless, the supply shortage will become bigger. Overall, the supply of ABF substrates cannot meet the demand until 2025, but their growth rate is not as good as that in past years. It is estimated to grow by 1.5% with an output of US$ 9.8 billion. Overall, the output of the global substrate market in 2023 will reach US$ 17.24 billion, slightly down 3.3%.

Taiwanese and Japanese manufacturers focus on ABF and Korean ones focus on BT substrates, while Chinese ones chase after them
        According to the IEK, ITRI, there are approx. more than 2500 PCB manufacturers. Unlike traditional PCB market that are highly competitive, the IC substrate market remains stable where top 10 manufacturers account for 84.8% of the global output. If it is measured based on the capital of manufacturers, Taiwanese companies are deemed as the largest supplier of substrates, accounting for 38.3% of the total output, followed by Korean and Japanese ones. The manufacturers in these three countries have grasp ninety percent of the substrate market. By manufacturer, the top 5 manufacturers are Taiwan-based Unimicron (17.7%), Taiwan-based Nan-Ya (10.3%), Japan-based Ibiden (9.7%), Korea-based SEMCO (9.1%) and Japan-based Shinko (8.5%). These five manufacturers have grasped more than 50% market share. The observations about the major players of substrates show that each player is still expanding their production capacities. However, most of them put off the expansion of BT production due to lower demand and invest their resources in production of ABF substrates.
        Taiwan and Japan have a similar structure of the substrate industry, while having the ability to manufacture ABF and BT substrates. In recent years, as the AI and HPC rapidly advance, the demand for FCBGA is increasing. Manufacturers in the two countries increasingly raise their ratio of ABF substrates. For Taiwanese manufacturers, the ABF substrates account for about 65% among the overall IC substrates, while for Japanese ones, they account for about 70%. Although Taiwanese manufacturers take the lead in terms of the production capacities of substrate, Japanese ones take the lead in terms of substrate materials (ABF and BT), advanced specialty chemicals (dry films, chemicals, inks, etc.) and critical process equipment (mask aligner, laser drillers, inspection machines, etc.), in addition to their mass production capacity. Therefore, from the viewpoint of the overall industry chain, the Japanese substrate industry is the most competitive.
        As the Korean memory industry is leading the trend of the global memory industry, most Korean manufacturers have focused on the development of BT substrates products, which account for 75% with most applications on DRAM and NAND, followed by smartphone applications, including SiP, AiP and RF modules. The top three Korea-based SEMCO, LG Innotek, Daeduck are still expanding their ABF production capacities for high-end application markets.
        While Chinese manufacturers have a smaller market share of the global substrate market, they are working hard to expand their manufacturing capacities. In addition to continued expansion of the production capacities of their major BT substrates, they are also developing their mid- and high-end ABF substrate business. Based on the current progress of SCC and Shenzhen Fastprint Circuit Tech Co., Ltd., it is expected that they can perform trial runs in Q4 2023. Due to the China-US tech war, Mainland China has allocated more subsidies to the semi-conductor-related industries to break through the restrictions imposed by the US. A subsidy of CNY$ 12.1 billon was allocated in 2022. With the funds from the government and its enormous market, the substrate industry in Mainland China has opportunities to break through the barriers and expand its impact on the global market.