As demand for artificial intelligence (AI) chips soars, volumes of server substrates are increasing, but the mood in Korea's printed circuit board (PCB) industry is muted. Even with high factory utilization, Samsung Electro-Mechanics and LG Innotek face rapidly rising costs that are squeezing profitability.
According to the Korea PCB & Semiconductor Packaging Industry Association on the 1st, a survey of major domestic substrate makers found that purchase prices for gold and copper have surged about 50% and 30%, respectively, from the start of the year. The problem is that more than half of corporations have been unable to immediately reflect these increases in their delivery prices. Because substrates are often supplied under long-term contracts with customers or priced on a quarterly basis, there is a window in which costs rise first and prices are adjusted later.
Gold and copper are indispensable materials in semiconductor substrates. Copper is the key material for copper foil used to form circuits and for wiring layers, while gold is used for plating to improve contact reliability. The higher the specifications for AI accelerators or data center substrates, the denser the circuits and the greater the number of layers tend to be, increasing the amount of precision-process materials required. A strong dollar worsens the burden for companies with a high share of imported raw materials. Even as supply volumes grow, costs are rising faster, eroding profitability.
By securities industry estimates, copper accounts for roughly 18% to 20% of the total production cost of PCB products. The share rises further when factoring in the expense of processing copper and holding inventory. Depending on the PCB substrate type, parts requiring high current or a thick copper layer face an even heavier copper cost burden.
Analysts say the surge in copper prices is dealing an even bigger profitability hit on production lines at major players such as Samsung Electro-Mechanics and LG Innotek. A representative at a large domestic materials firm said, "Among PCB makers, large corporations with a high proportion of commodity products inevitably face greater profitability pressure," adding, "For AI server semiconductor substrates, delivery prices are rising, so the impact is relatively smaller, but Japanese companies such as Ibiden still hold an overwhelming position in that field."
With the limits of the existing PCB business structure becoming clear, industry attention is shifting to glass substrates, a next-generation semiconductor packaging material. Glass substrates are considered more heat-resistant and less prone to warping than conventional plastic-based substrates, making them advantageous for implementing ultrafine circuits required by highly integrated chips. They also offer room to reduce signal loss and boost data transmission performance, with expectations for improved power efficiency. Above all, because the process is highly complex, capturing the early market could allow companies to move beyond simple unit-price competition and upgrade their product mix, a key attraction.
Still, there are many hurdles left for glass substrates. Challenges such as drilling and plating ultrafine through-holes in glass, securing Production yield in large-area processes, and managing breakage and cracking must be solved simultaneously. Until equipment and process conditions stabilize, mass-production speed and cost competitiveness are likely to be decisive.
Samsung Electro-Mechanics has begun developing glass substrates and building a production system, while Samsung Electronics is preparing technology to replace silicon interposers with glass interposers over the long term. SKC and LG Innotek are also seeking an early lead in the market through responses to North American customers and prototype development.