The lead time for key semiconductor materials, such as copper-clad laminates (CCL) and copper foil, has sharply increased from about two weeks to as long as six weeks.
This situation is rooted in the explosive growth of the AI industry. As demand for AI servers and accelerators skyrockets, the need for more complex and high-performance semiconductor packages has surged. This has created a significant bottleneck in the supply chain, starting with advanced packaging services like TSMC's CoWoS. The pressure has now cascaded down to the materials used to make the substrates for these packages.
Specifically, two critical materials are at the heart of this bottleneck. The first is T-glass, a special type of glass fiber essential for high-performance substrates due to its low thermal expansion. The market for T-glass is dominated by Japan's Nittobo. While Nittobo is expanding its production capacity, the new facilities are not expected to be fully operational until 2027, leaving a supply gap in the short term. The second is HVLP (High-Very-Low-Profile) copper foil, which is crucial for minimizing signal loss in high-speed AI applications. The industry is rushing to increase HVLP production, but this shift also tightens the supply of more conventional copper foils. Compounding these issues, the global price of raw copper has reached near-record highs, pushing up costs for all related products.
The causal chain is clear. First, the massive, ongoing build-out of AI data centers created sustained, high-level demand. Second, this led to a well-publicized capacity shortage in advanced chip packaging, as noted by major players like Broadcom. Third, this pressure has now moved further down the supply chain to substrate and material manufacturers. Recent announcements, such as Doosan's major investment in a new CCL plant in Thailand and SK hynix's comments on HBM demand far exceeding supply for the next three years, confirm that the industry is responding to this structural shift. This has triggered a scramble to secure materials, leading directly to the longer lead times we see today.
This supply crunch has had a direct impact on the market. The stock valuations of key players in the Korean supply chain, like LG Innotek and Samsung Electro-Mechanics, have more than doubled. This reflects investors' belief that these companies will benefit from higher prices and a better product mix focused on high-margin, high-performance materials. However, for substrate makers, the longer lead times also mean they must tie up more cash in inventory, which can strain working capital and cash flow.
- Glossary
- CCL (Copper Clad Laminate): The base material for printed circuit boards (PCBs), consisting of an insulating layer laminated with copper foil.
- T-glass: A high-performance glass fiber with low thermal expansion and excellent electrical properties, used in advanced semiconductor substrates.
- Lead Time: The total time elapsed from the moment an order is placed until it is delivered to the customer.