What is the IC substrate that is in short supply by 2024?

Dongshan Precision announced that the company intends to invest in the establishment of a wholly-owned subsidiary specializing in the research and development, design, production and sales of IC substrates, with a total investment of no more than 1.5 billion yuan. Affected by this announcement and market conditions, the company surged 8.22% today.

In addition, as the mobile market puts forward higher requirements for wafer integration and various performances, it has also rapidly increased the demand for high-performance IC substrates. Industry insiders predict that the industry's capacity shortage may continue until 2024. .

What is IC substrate? what's the effect?

The integrated circuit industry chain can be roughly divided into three links: chip design, wafer manufacturing, and packaging and testing.

IC substrate is a key carrier of the IC industry chain packaging and testing link, accounting for 40-50% of the cost of packaging raw materials, and its downstream is the semiconductor packaging and testing industry, such as ASE, Licheng Technology, Tongfu Microelectronics, etc.

The IC carrier board not only provides support, heat dissipation and protection for the chip, but also provides an electronic connection between the chip and the PCB. It can even be embedded with passive and active devices to achieve certain system functions. There is a high degree of correlation between IC carrier boards and chips, and different chips often need to be designed to match with dedicated IC carrier boards.

According to Prismark data, the global IC substrate market in 2020 will be 10.2 billion U.S. dollars, breaking through the 2011 peak. It is expected to reach 16.2 billion in 2025, with a compound annual growth rate of 9.7%.

Industry price increases may continue until the second half of next year

IC substrate products can be divided into resin substrate systems such as BT and ABF according to the resin substrates they are applied to. At present, both of them are in short supply.

According to China Merchants Securities' latest relevant survey, the supply of BT substrates has exceeded demand throughout the year. Since January this year, product prices have increased by 5%-15%; for ABF substrates, some contracts have even been signed until 2023.

With the blessing of orders from international chip giants, industry insiders said that the IC substrate is fully loaded with orders and the price increase will continue until at least the second half of 2022.

Why is there a shortage of IC carrier boards?

On the demand side, the expansion of China's wafer production has catalyzed the domestic demand for IC substrates. Emerging technologies such as big data, artificial intelligence, Internet of Things, and automobile intelligence have driven the rapid growth of global computing power demand, which in turn boosted the increase in the HPC chip market. The increase in demand for HPC chips has further increased the demand for ABF carrier boards.

In addition, the increase in 5G AiP modules has resulted in new demand for BT substrates, and the successive launches of domestic IDM and fab production capacity have driven the domestic packaging and testing demand to further increase.

On the supply side, the release of production capacity is slow, and the short-term black swan event has further tightened the supply.

Upstream raw material ABF + imported equipment restrictions, superimposed IC substrate barriers + long production expansion cycle, together led to slow release of IC substrate production capacity.

In addition, under the short-term fire black swan incident, the supply has further tightened. Apple’s PCB supplier and large IC carrier board manufacturer Xinxing Taoyuan Shanying Plant had two fires in October 2020 and February 2021. Japan’s largest IC carrier board manufacturer IBIDEN caught fire in December 20, and impacted the IC carrier board. supply.

Major domestic companies

From the perspective of the market structure, according to Prismark statistics, the global IC carrier board CR10=80%, CR3=36%, the top three manufacturers are Taiwan Xinxing, Japan Ibiden, South Korea SEMCO, respectively, the market share is 15%, 11%, 10%.

According to data, the current market share of IC substrates in mainland China is less than 5%, and most of them are concentrated in low-end markets such as MEMS. However, mainland companies have already entered the competition to enter the high-end substrate market. After the production capacity ramps up, they are expected to steadily increase their market share, such as Shennan Circuits and HOREXS.