- Demand for ABF substrates is expected to recover gradually in the second half of 2023, supported by improved PC/NB inventories and increased shipments of new server CPU platforms by Intel and AMD.
- AI and advanced packaging technology will serve as long-term growth drivers for demand for high-end ABF substrates, but oversupply in the low-end to mid-end ABF substrate market remains a concern.
- Demand for BT substrates remains sluggish with limited recovery prospects for smartphones, but there are early signs of bottoming out.
Disappointing Q1 2023 results for Taiwanese IC substrate makers, including Unimicron, Kinsus and Nanya PCB, weighed on IC substrate makers’ Q2 2023 results as the cyclical downturn was more severe than expected. It shows the possibility that it will continue to fall. However, Q2 2023 or Q3 2023 could be the trough for the IC substrate sector.
Demand for ABF substrates is expected to recover gradually in the second half of 2023
After the second half of 2022, some end applications such as the PC/NB and server segments have undergone significant inventory adjustments. The gap between demand and supply of ABF substrates is expected to shrink. The Taiwanese substrate vendor expects overall ABF substrate usage to continue its downward trend in Q2 2023. However, Unimicron expects usage to improve towards the end of Q2 2023. This is an end board product mainly used for Intel’s Sapphire Rapids and AMD’s Epyc Genoa.
Oversupply in low-end to mid-end ABF substrate market remains a concern
Both NVIDIA’s A100 and H100 utilize TSMC’s CoWoS advanced packaging technology. The ABF substrate size for data center GPUs will grow with more layers, driving a long-term increase in demand for high-end ABF substrates. However, demand for ABF boards from GPUs in data centers is only a low-single-digit percentage of total demand for ABF boards. Therefore, the contribution from AI/HPC applications will not be large in the short term. On the other hand, the world’s leading ABF substrate suppliers such as Ibiden and Unimicron continue to expand their production capacity of ABF substrates, raising concerns about long-term oversupply in the low- to mid-priced ABF substrate market. ing.
BT substrate market: signs of bottoming out
Most of the demand for BT substrates comes from smartphone and memory applications. However, demand has been sluggish since the smartphone and memory market entered the destocking stage in 2022. From Q4 2022 onwards, there are signs that the rush of orders will improve demand from certain end applications such as TV SoCs. As for smartphones, demand remains weak as the recovery of the Chinese smartphone market, especially the Android smartphone market, is slower than expected. This is evident in his Q1 2023 inventory days increases for companies such as MediaTek and Qualcomm. The ongoing inventory destocking of smartphones is expected to continue for some time. It will have to wait at least until late Q4 2023 for the recovery in smartphone demand to have a positive impact on BT substrate demand.
