AI Chip Boom Accelerates Race for Glass Substrates

Next-generation AI accelerators require greater computing density, memory bandwidth and package size, increasing their dependence on CoWoS advanced packaging and ABF substrates. CoWoS integrates processors with high-bandwidth memory, while ABF substrates connect the package to the system board and manage signal and power delivery. Capacity in both segments is therefore becoming as critical to AI server shipments as the availability of the chips themselves.

Institutional analysts say the supply-chain bottleneck is shifting toward CoWoS and ABF capacity as demand outpaces available production. Customers are securing output through longer-term reservations and, in some cases, bidding for the remaining slots. The imbalance is expected to give substrate makers greater pricing power and lift utilization, product mix and margin prospects, although the report disclosed no company-specific booking volumes, contract values or capacity expansion dates.

Demand for artificial-intelligence chips and high-performance computing is increasing pressure on advanced packaging systems to provide better heat management, denser interconnections and faster signal transmission. Innolux is seeking to apply its expertise in glass processing and precision manufacturing to through-glass-via, or TGV, substrates and silicon photonics, giving the Taiwanese panel maker a potential route into the next generation of AI chip supply chains.

Innolux reported a significant improvement in second-quarter profitability, with earnings per share rising nearly twofold from the previous quarter. The company has also established a new semiconductor subsidiary, 群超半導體, to accelerate development and commercialization of TGV glass substrates and related technologies. Innolux is targeting an advanced-packaging glass substrate market that it expects could reach $8 billion by 2030, driven by AI and high-performance computing applications.

TSMC is developing glass core substrates, or GCS, to address warpage, heat dissipation and interconnection requirements as AI chips grow larger, while improving advanced-packaging performance. The technology will also affect the pace at which Taiwanese companies including Innolux can enter the semiconductor supply chain. Related reports did not disclose TSMC’s investment.

A recent Goldman Sachs report said TSMC’s commercial mass production of GCS would be delayed until after 2030. Conventional ABF substrates will remain the mainstay during the transition, deferring potential orders for Innolux and other suppliers while boosting near-term demand for Nittobo’s high-end glass fiber cloth. The report’s publication date and the value of any new orders were not disclosed.