AI Drives Substrate Market Back to Growth; Global Market Size Expected to Reach $15.32 Billion in 2024

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Under the impetus of emerging applications such as electric vehicles, AI, and high-performance computing, the semiconductor industry is currently experiencing rapid growth. Among these, IC substrates, which are crucial for packaging, have gained significant attention. However, in 2023, global inflation caused the consumer market to cool rapidly, affecting the demand for substrates. Both BT substrates used in mobile phones and memory, as well as ABF substrates used in CPUs and GPUs, saw declines. According to statistics from the Industrial Technology Research Institute (ITRI), the global substrate market value in 2023 was approximately $13.34 billion, a 26.7% decrease from 2022.

Looking ahead to 2024, despite ongoing uncertainties in the global economy and geopolitical risks, the adjustment of end-product inventories and signs of recovery in the consumer market are expected to help the global substrate market rebound. Especially with the strong demand driven by AI, high-end substrates are anticipated to recover further. The global substrate market is expected to reach $15.32 billion in 2024, a 14.8% increase from 2023.

In the global market, Taiwan is the largest substrate supplier, accounting for about 32.8% of the total market value, followed by Japan (27.6%) and South Korea (27.0%). The top five substrate manufacturers are Taiwan's Unimicron (16.0%), South Korea's SEMCO (9.9%), Japan's Ibiden (9.3%), Austria's AT&S (9.1%), and Taiwan's Nan Ya PCB (8.7%), with these five companies holding more than half of the global market share.

IC substrates are divided into two major categories based on the substrate material: BT and ABF. In 2023, due to the decline in consumer electronics like mobile phones and computers, and the pressure from increased memory inventory, the overall demand for BT substrates dropped significantly. The global market value of BT substrates in 2023 was approximately $6.18 billion, a decline of 27.1%. According to Gartner's forecast, the memory market is expected to strongly recover in 2024, with revenue projected to surge by 66.3%. As the memory market becomes more active, the demand for related substrates will also be boosted. The global BT substrate market is expected to grow by 16.5% in 2024, reaching $7.2 billion.

In 2023, despite the hot demand for AI servers, the decline in the computer market and the lower-than-expected demand for general servers led to a significant decline in ABF substrates. The global market value of ABF substrates in 2023 was approximately $7.16 billion, a decline of 26.3%. With the increasing demand for AI computing power and the development of advanced packaging technologies such as CoWoS + 2.5D packaging, which closely integrates HBM and GPU, ABF substrates are expected to develop towards larger areas, more layers, and finer lines. Additionally, AI PCs are expected to drive a wave of replacements, promoting the recovery of the ABF substrate market. The global ABF substrate market is expected to grow by 13.5% in 2024, reaching $8.12 billion.

Looking to the future, although Taiwan, Japan, and South Korea account for nearly 90% of the global substrate market, China and the United States are rapidly catching up. China aims to achieve technological self-sufficiency through its "new quality productivity" strategy, continuing to provide subsidies to the semiconductor industry and actively enhancing the self-sufficiency of basic equipment such as AI chips, servers, switches, and RF components. Supported by government funding and a large domestic market, China's substrate industry has the opportunity to break through existing limitations and expand its influence in the global market. On the other hand, the United States continues to promote the localization of the semiconductor supply chain. On November 20, 2023, the U.S. announced the National Advanced Packaging Manufacturing Program (NAPMP), investing $3 billion in advanced packaging pilot facilities, workforce training, and project grants, including substrates in the program. It remains to be seen whether the designation of substrates as strategic materials by the U.S. will affect the layout of global substrate manufacturers in North America.

Emerging application demands are driving innovation in substrate technology, such as the high demand for AI chips and memory (HBM) with high computing power in servers, and Intel's announcement in 2023 of its plan to achieve mass production of glass substrates by 2030. These advancements in advanced packaging technology, through horizontal or vertical integration of chips, have broken through the limitations of traditional transistor density, opening up new possibilities for high-end applications such as HPC and AI, and are key to the future development of the semiconductor and substrate industries.