Chip packaging bottleneck: Nvidia pays billions to reserve supplier capacity
Substrates, packaging, testing: Nvidia aims to raise substrate capacity 2.5-fold within three years. Ibiden, Samsung Electro-Mechanics and Amkor are expanding to supply it.
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Nvidia aims to ease shortages of the components around its chips through advance payments and capacity reservations. According to the company, capacity for substrates – the boards on which chips sit inside their package – is to grow 2.5-fold over three years. Nvidia is paying Japanese maker Ibiden a multibillion-dollar advance to triple capacity at its Ono plant, with the additional output due to start ramping in the first quarter of 2028. Samsung Electro-Mechanics, which plans plants in Sejong and Busan, joins the supplier group. Its shares gave up early gains in Seoul on Wednesday.
Packaging and testing are also set to expand: Amkor plans to raise interposer wafer capacity in South Korea by more than 300% by the end of 2028. Testing specialist KYEC receives a $1.1 billion advance for new facilities in the United States. Nvidia expects total testing capacity to double from 2026 to 2027. "Demand is extraordinary," Chief Executive Jensen Huang said.