The 1,219% increase
shows both profit and the
impact of the chip crisis on
this obscure Taiwanese firm

Nan Ya Printed Circuit Board Corp. Is
infrequently a household call inside the
tech industry. But the difficult to understand
Taiwanese corporation makes an important
aspect for chipmaking that has become the
ultra-modern bottleneck for automakers
and electronics organizations suffering
from semiconductor shortages.
The component is going via the unwieldy
name of Ajinomoto construct-up movie
(ABF) substrate and it’s one of the least
glamorous niches in the chips industry. It’s
a part of the packaging that protects the
handful of chips needed to power your
computer or vehicle and allows
communique amongst them.
Many of the world’s maximum superior
semiconductors can’t run without the
substrates. So at the same time as giants
like Intel Corp. And Taiwan Semiconductor
Manufacturing Co. Spend hundreds of

billions trying to alleviate chip shortages,
the lack of that unmarried element could
avoid production for years. Supplies are
probable to stay restrained till at the least
2025 because of constrained capacity,
according to humans acquainted with the
problem.
Top executives from Intel, Nvidia Corp. And
Advanced Micro Devices Inc. Have all
warned approximately shortages in current
months. Broadcom Corp. Recently
instructed customers the lead time for its
essential router chips goes up from sixty
three weeks to 70 weeks due to a lack of
substrates, in line with one character, who
requested now not to be named as the
facts is not public.
The crunch shows how susceptible
worldwide deliver chains remain to
disruptions nearly two years into the Covid-

19 pandemic. Companies and traders have
nearly no visibility into in which the next
surprise ought to come from.
“This crisis caught a variety of gamers off
shield,” stated Peter Hanbury, a associate
at Bain & Co. “As demand for PCs, gaming
playing cards and cloud services expanded
with Covid-19 and running from domestic,
this critical issue became a real bottleneck
for plenty players consisting of AMD and
Nvidia.”
The squeeze is popping low-profile
organizations like Nan Ya into inventory
market stars. Its shares have soared
1,219% in the past three years via
Wednesday, and analysts task extra to
return. ABF substrate makers along with
Unimicron Technology Corp., Kinsus
Interconnect Technology Corp., and Ibiden
Co. Have all visible their shares climb too.

“Profits at those groups are predicted to
maintain soaring for future years as cargo
quantities skyrocket,” said Hideki Yasuda,
an analyst at Ace Research Institute.
Nan Ya rose as a great deal as three.2%
Thursday, whilst Unimicron received 3.9%
and Kinsus brought 2.7%.
Chart
ABF substrate is a extraordinarily new
element, pioneered by means of Intel
within the late Nineties as it evolved extra
effective microprocessors. It takes its call
from Ajinomoto Co., a Japanese business
enterprise that produces the substrate’s
film-like insulation. The fabric changed into
first adopted because the preferred
packaging era for significant processing
gadgets in non-public computers and

servers because it helps speedy
computations by excessive-cease chips.
Sales of ABF substrates surged inside the
early 2000s with the net boom, then took a
success as smartphones commenced
replacing PCs in the overdue 2000s.
Substrate makers’ fortunes commenced to
get better round 2018 as nations began to
roll out 5th-generation wi-fi offerings, which
led groups like Broadcom that make
networking chips to adopt the fabric to be
used in routers, base stations and
associated packages. The introduction of
5G also boosted call for for greater
effective server chips to handle cloud
computing, artificial intelligence and clever-
using technology. The price of ABF
substrate, commonly quoted in step with
chip, starts at approximately 50 cents a
chip and tops $20 for premium server
CPUs.

Major semiconductors corporations like
Intel, AMD and Nvidia now all depend upon
ABF substrates to supply the most
effective chips inside the global. But
substrate makers have been reluctant to
invest aggressively in ability because of
money-dropping slumps within the beyond.
Supply is anticipated to upward push at a
compound annual growth fee of 16% via
2024, even as demand is predicted to
climb 18% to 19%, Citigroup Inc. Analysts
Grant Chi and Takayuki Naito forecast in
early July.
Owen Cheng, an analyst at President
Capital Management Corp., wrote in a
word this month that the space among
demand and deliver will upward thrust as a
good deal as 33% next yr compared to this
year because of growth in technology like
high-performance computing and synthetic

intelligence. That will probably gain the
likes of Nan Ya and Unimicron.
“Nan Ya could enhance its ABF substrates
charge by way of 35% in 2022,” Cheng
wrote.
Chart
The ABF state of affairs provides to a chain
of bottlenecks inside the chip industry that
have hampered the global restoration from
Covid-19, hitting even giants like Toyota
Motor Corp. And Apple Inc. Companies
around the world are struggling to provide
sufficient to satisfy call for.
Intel warned in July that sales in its client
computing organization will decline
sequentially because of constraints from
substrates and other additives. Broadcom,
which sells to groups like Apple and Cisco

Systems Inc., declined to comment on its
wait times.
ChartSome clients are taking subjects into
their own fingers. AMD Chief Executive
Officer Lisa Su told analysts in April that
the chipmaker could put its own money into
growing capability at suppliers.
“On the substrate aspect, particularly, I
assume there has been beneath-funding
inside the industry,” she said. “And so
we’ve taken the opportunity to spend
money on a few substrate capability
devoted to AMD, and so that it will be some
thing that we maintain to do going forward.”
Auto chip suppliers will use more ABF
substrates as vehicles develop more and
more electrified and digitized. They are,
however, suffering to get top precedence
among substrate makers due to the fact
they lack the bargaining power of major

semiconductor businesses like Intel,
human beings acquainted with the
scenario stated. That ought to suggest
greater direct funding in substrate
manufacturers or the access of latest ABF
substrate gamers.
“Going forward, I anticipate we’ll see
greater gamers change their approach to
this section with a more cautious plan to
monitor ability and extra efforts to reserve
capacity earlier,” stated Hanbury of Bain.
Nan Ya is stepping up investment. The
organization is spending at the least
NT$eight billion ($289 million) in capital
expenditure this yr or even greater in 2022.
The enterprise will raise ABF substrate
manufacturing potential forty% from its
2020 stage by way of 2023, according to
business enterprise spokesman Jack Lu.
Even that received’t be enough for clients.

“Demand will continue to outpace deliver
till 2023,” Lu stated.
Unimicron stated in July that maximum of
the enterprise’s ABF substrate capacity
has been allotted to diverse clients up until
2025.
The tightness is pushing up earnings
during the enterprise. Nan Ya is projected
to peer operating earnings nearly triple this
yr as revenue rises 33%, in keeping with
analyst estimates compiled by using
Bloomberg. Citigroup analysts Chi and
Naito raised their rate objectives for all of
the primary ABF substrate makers,
inclusive of Unimicron, Nan Ya, Kinsus and
Ibiden.
Cheng of President Capital Management
recently bumped his fee target for Nan Ya

to NT$570. That’s 27% higher than its
cutting-edge rate.