The status of packaging substrate in the PCB industry

If the PCB industry were a pyramid, undoubtedly, the substrate would be the gleaming jewel perched at its apex.

Firstly, it holds immense importance.

The substrate is the core material in the chip packaging process, characterized by its high density, precision, performance, miniaturization, and thinness. It, along with the die and leads, forms the chip after packaging and testing. The IC substrate not only provides support, heat dissipation, and protection for the chip but also serves as the electronic connection between the chip and the PCB, playing a pivotal “linking and enabling” role, and can even embed passive or active devices to achieve certain system functions.

Secondly, its barriers are exceptionally high.

According to the minutes of the investor survey by Xinsen Technology, newcomers in the substrate field require at least 2 to 3 years to establish a team, acquire land and build factories, complete decoration and debugging, pass large customer certifications, and ramp up production capacity. Looking at the recent projects of domestic manufacturers in substrate production, the construction phase alone takes up to 2 years, with several more years needed for capacity ramp-up. Moreover, projects involving high-end substrates like FC-BGA require even higher investment amounts due to the exorbitant equipment prices. Just consider, any random substrate project easily surpasses 2 billion yuan in investment, making it a “fighter jet” in the industry’s “burning money” battle.

Aside from raising the investment threshold, the high processing difficulty is also a core barrier in substrate production. From the perspectives of product layers, board thickness, line width and spacing, and minimum annular width, substrates tend to lean towards precision and miniaturization. Moreover, with a unit size smaller than 150*150 mm, they represent a higher-end category of PCBs. Among them, the line width/spacing is the core differentiation, with the minimum line width/spacing of substrates ranging from 10 to 130 micrometers, far smaller than the 50 to 1000 micrometers of ordinary multilayer rigid PCBs. Ordinary PCB factories cannot handle such high-difficulty technical tasks.

Thirdly, its market prospects are incredibly vast.

With the rapid advancement of technology in the electronics industry, terminal application products are trending towards miniaturization, intelligence, and customization, making the demand for high-end PCB products more prominent. Moreover, driven by a new wave of computational power, China’s substrate supply fails to meet the robust market demand, presenting the industry chain with expansive market space.

From the global demand perspective of IC substrates, these products are primarily applied in fields such as CPUs, GPUs, and high-end servers.

In recent years, with the widespread application of technologies like 5G, AI, and cloud computing, the demand for high-computational chips has been continuously increasing, thereby propelling the growth of substrate production value. This trend has stimulated a significant growth in the demand for chips and advanced packaging in the electronics industry, indirectly promoting the development of the global substrate industry.

In terms of market size, the Chinese substrate market reached 20.1 billion yuan in 2022, a year-on-year increase of 1.5%. According to forecasts from the China Industry Research Institute, by 2023, this market size will reach 20.7 billion yuan, with a growth rate of 3%. Simultaneously, the production volume of Chinese substrates has been increasing year by year. In 2022, the production reached 1.381 million square meters, an 11.73% increase year-on-year. It is expected to reach 1.515 million square meters by 2023, with a growth rate of 9.7%.

Looking at the medium to long term, the IC substrate market is expected to maintain rapid growth. According to Prismark’s forecast, by 2027, the market size of IC substrates will reach 22.286 billion US dollars, with a compound annual growth rate (CAGR) of 5.10% between 2022 and 2027. It is estimated that by 2027, the overall size of China’s IC substrate industry will reach 4.387 billion US dollars, with a CAGR of 4.60% between 2022 and 2027.

The recent surge in Chiplet packaging technology has injected new vitality into the growth of IC substrates. The rapid growth in the market size of Chiplet processor chips will drive the demand for ABF substrates. Advanced packaging technologies will increase the consumption of ABF substrates, and the introduction of 2.5/3D IC high-end technologies into products may enter mass production in the future, inevitably bringing greater growth momentum.

Fourthly, its players are industry giants.

Currently, IC substrate companies from Japan, South Korea, and the Taiwanese region hold absolute leading positions. According to statistics from the Taiwan Printed Circuit Association, the top ten global substrate suppliers and their market shares in 2022 were as follows: Unimicron (17.7%), Nan Ya Printed Circuit Board (10.3%), Ibiden (9.7%), Samsung Electro-Mechanics (9.1%), Shinko Electric Industries (8.5%), JCET Group (7.3%), LG Innotek (6.5%), AT&S (6.1%), Daeduck Electronics (4.9%), and Compeq Manufacturing (4.7%).

The top five global BT substrate manufacturers were LG Innotek (14.2%), Samsung Electro-Mechanics (11.9%), Compeq Manufacturing (10.3%), JCET Group (9.5%), and Unimicron (7.7%). The top five global ABF substrate manufacturers were Unimicron (26.6%), Ibiden (14.6%), Nan Ya Printed Circuit Board (13.5%), Shinko Electric Industries (12.8%), and AT&S (8.0%).

Although China’s IC substrate industry started relatively late, strong players have emerged continuously. Major suppliers include Shennan Circuit, Xinsen Technology, and Zhuhai Youya, which primarily possess mass production capabilities for BT substrates. Furthermore, since 2019, some manufacturers primarily engaged in PCB products have also begun investing in IC substrate projects, indicating a quietly evolving industrial landscape.

In conclusion, factors such as technological difficulty, industry players, investment barriers, market prospects, and critical roles have firmly established substrates at the forefront of the industry, rightfully earning them the title of the gleaming jewel atop the PCB pyramid.