A New Growth Driver
Samsung Electro-Mechanics (SEM) is determined to foster the flip chip-ball grid array (FC-BGA) substrate business as a future growth driver.
The company's president Jang Duck-hyun, who took office in December 2021, said at the 49th general shareholders’ meeting on March 16 that the packaging technology that integrates all systems on a substrate will develop into a platform in the future. “We will open the era of system on substrate (SoS) that improves semiconductor performance.” SoS is a term that derives from system on chip (SoC), which refers to a chip that integrates a system.
FC-BGA substrates have been used mainly for high-performance chips made by Intel, AMD, and NVIDIA. However, in recent years, a supply shortage of FC-BGA substrates is intensifying as they are also used for electric vehicles, artificial intelligence (AI) devices, and data centers. This is why FC-BGA substrates are dubbed the “second semiconductor.”
Demand for FC-BGA substrates is on the uptick, but the FC-BGA industry has a technologically high entry barrier. This is because they require high stability and fast transmission speed. Currently, Japan’s Ibiden and Shinko Denki, Taiwan’s Unimicron, and Samsung Electro-Mechanics are mass-producing FC-BGA substrates. Recently, LG Innotek entered the FC-BGA business. Industry insiders expect the demand for FC-BGA substrates to increase exponentially as the size of package substrates expand due to an increase in CPU and GPU cores.
Samsung Electro-Mechanics is actively working to promote its FC-BGA business. In December 2021, the company decided to invest US$920 million (about 1.1 trillion won) to build FC-BGA substrate facilities and infrastructure at its plant in Thai Nguyen Province, Vietnam. It also announced on Feb. 28 that it will invest an additional 320 billion won in the plant to expand FC-BGA substrate production.
Industry analysts expect Samsung Electro-Mechanics to post an all-time high of 10,396.5 billion won in sales and 1,697.2 billion won in operating profit in 2022 thanks to its FC-BGA business. The figures are an annual increase of 7.5 percent and 14.1 percent, respectively.