Samsung Electro-Mechanics is accelerating its supply of flip chip (FC)-ball grid array (BGA) for application-specific integrated circuits (ASIC), which is rapidly growing alongside the emergence of the artificial intelligence (AI) market. It is reported that Samsung Electro-Mechanics plans to start supplying FC-BGA for its AI semiconductor, Traineum, to Amazon, and then significantly supply FC-BGA to Apple, Google, and Meta next year. Amid declining revenue in its substrate business, the company is tightening its focus on supplying high-value substrates.
According to Samsung Electro-Mechanics' semi-annual report on the 22nd, the operating profit of the package solution division in the first half of this year was 47.5 billion won, a decrease of about 23% compared to the same period last year (62.2 billion won). The downturn has continued, showing a decrease of about 53% compared to the same period two years ago (101.9 billion won). As the supply of high-value semiconductor substrates, such as AI and server FC-BGA, has not yet been fully established, it is estimated that declining IT demand has compromised revenue. Samsung Electro-Mechanics is expected to improve its profitability by increasing its FC-BGA shipments in the application-specific integrated circuit market starting next year.
FC-BGA is a next-generation semiconductor substrate that is more versatile due to its larger size compared to chips and is suitable for high-performance applications in AI, PCs, servers, clouds, and electric vehicles. Its advantage lies in its ability to stack layers higher than other semiconductor package substrates, securing more circuits and thus improving the overall performance of semiconductors, such as power efficiency. According to Fujifilm Research Institute, the global FC-BGA market size is expected to more than double from $8 billion (approximately 11 trillion won) in 2022 to $16.4 billion (approximately 23 trillion won) by 2030.
Samsung Electro-Mechanics is diversifying its portfolio, which is heavily weighted toward multilayer ceramic capacitors (MLCC), and is accelerating its strategy to target the rapidly growing FC-BGA market that is expected to emerge with the AI market. In 2021, it made an investment of about 2 trillion won to expand its FC-BGA production capacity. Although it is seen as a latecomer compared to established competitors such as Ibiden, it is making every effort to expand supply, focusing on the application-specific integrated circuit market.
Samsung Electro-Mechanics is reportedly planning to fully supply FC-BGA to Amazon, which it has recently secured as a new client, as well as to Apple and Google, which are developing their custom application-specific integrated circuits in collaboration with Broadcom, starting next year. A component industry official noted, "It is true that entering the FC-BGA market is delayed compared to leading companies, but we are quickly catching up in production capacity and technology, and we expect that full-scale supply starting next year will also contribute to improving profitability."
The supply of FC-BGA for Tesla's AI chips is also expected to expand. This is based on the expectation that the Samsung Electronics Foundry Division's contract with Tesla for mass production of next-generation AI chips will steadily increase the supply of FC-BGA from Samsung Electro-Mechanics. Currently, it is understood that Samsung Electro-Mechanics has exclusive supply of FC-BGA for Tesla's AI4.
A component industry official stated that "it is expected that supply of FC-BGA for the next-generation AI chip, AI5, will start next year," and added, "Considering the business structure of supplying FC-BGA to the foundry manufacturing the chips, it is encouraging that the Samsung Electronics Foundry Division has entered a large-scale long-term contract with Tesla."