Samsung Electro-Mechanics and LG Innotek are focusing on the high-value semiconductor substrate "flip chip ball grid array" (FC-BGA) to diversify their business portfolios. But as Taiwan's TSMC, the world's No. 1 foundry (contract semiconductor manufacturing) corporation, said it will commercialize a new technology to make semiconductors without FC-BGA in 2027, concerns are growing that the FC-BGA business, which had been on a growth trajectory, could shrink.
A semiconductor substrate is a core component that securely fixes a semiconductor chip and connects it to the mainboard to deliver electrical signals. FC-BGA is evaluated as a next-generation high-value substrate suitable for increasingly large artificial intelligence (AI) semiconductors, as it is larger than conventional substrates and can stack semiconductors higher.
According to the industry on the 10th, TSMC is developing System on Wafer-X technology with the goal of commercialization in 2027. The technology TSMC is developing is a next-generation high-integration packaging process that integrates multiple semiconductors on the wafer itself without conventional packaging substrates. By omitting the substrate, this technology can place chips more densely and supply power at the level of thousands of watts (W), and there is an outlook that it will be used for mass production of next-generation AI semiconductors. TSMC introduced the technology while saying at the Electronic Components and Technology Conference (ECTC) 2025 held in Texas in May that it will use it for mass production of extra-large AI semiconductors.
An AI semiconductor mounts a graphics processing unit (GPU) at the center to handle computation and places high bandwidth memory (HBM) around it to supply data at high speed. Under the GPU and HBM, a "silicon interposer" is mounted to connect the semiconductors and the FC-BGA to maximize electrical efficiency. Through the FC-BGA, AI semiconductors connect to other components inside a server and operate. The System on Wafer-X that TSMC has said it is developing is a concept that directly connects the GPU and HBM on the wafer without such a silicon interposer and FC-BGA. It is presumed to be an advanced process of the "integrated fan-out (InFO)" technology specialized and applied to semiconductors ordered by Apple.
Samsung Electro-Mechanics and LG Innotek have selected FC-BGA as a next-generation growth driver and are expanding their businesses. Both corporations have been told they need to diversify because they rely heavily on revenue from specific products. According to Samsung Electro-Mechanics' semiannual report, in the first half of this year the component business unit, which handles multilayer ceramic capacitors (MLCC), accounted for nearly 45% of sales. During the same period, LG Innotek's optical communication business unit, which handles the camera module business, accounted for 80% of sales.
Samsung Electro-Mechanics plans to supply FC-BGA to Google and Meta next year, including to Amazon. LG Innotek has said it is mass-producing and supplying PC-use FC-BGA to two North American big tech clients, and it is aiming to enter the server-use market next year. An electronics components industry official said, "While FC-BGA and the like are being actively used in mass production of AI semiconductors, demand could slow if System on Wafer-X is commercialized."
However, some analysis says such concerns are premature. Chae Min-suk, an analyst at Korea Investment & Securities, said, "Just as TSMC's past wafer-level packaging (WLP) technology did not completely replace demand for flip chip chip scale package (FC-CSP), a substrate used in smartphone application processors (AP), System on Wafer-X and FC-BGA are highly likely to coexist," adding, "System on Wafer-X will be used first on a limited basis for ultra-high-performance AI server chips. There is no need to worry about a slowdown in FC-BGA demand just yet."