Recent reports confirm that Samsung Electro-Mechanics and LG Innotek's semiconductor package substrate plants are running at significantly higher capacities.
This isn't just a fleeting improvement; it's a clear signal that the massive investments in AI infrastructure are translating into real demand for high-performance components. Both companies' latest business reports show a distinct rise in average utilization rates for their package substrate lines—Samsung Electro-Mechanics reached 70% and LG Innotek hit 80.8%. These numbers are backed by a series of reinforcing events that have unfolded over the past several months.
First, the most direct cause is the 'AI CAPEX supercycle.' In early 2026, tech giants like Alphabet and Microsoft announced staggering capital expenditure plans, with Alphabet doubling its 2025 budget to nearly $180 billion. This massive spending on data centers, servers, and custom AI chips (like TPUs and ASICs) directly fuels the demand for the complex, multi-layered FC-BGA substrates that these companies produce. The demand visibility now extends well into the second half of 2026.
Second, company leadership has been openly optimistic. At CES 2026, executives from both Samsung Electro-Mechanics and LG Innotek spoke of bringing their FC-BGA lines to full capacity sooner than expected. This confidence, which predated the official report numbers, signaled that their order books were already filling up.
However, there's a challenge brewing on the supply side. Resonac, a major supplier, recently announced a steep 30% price hike for CCL, a critical raw material for substrates. This, combined with rising copper foil prices, puts significant cost pressure on substrate makers. To protect their margins, they must now focus more intensely on producing higher-value products—larger, more complex substrates for high-performance computing (HPC) and AI applications—that can command higher prices.
In essence, the rising utilization rates are a story of booming demand meeting rising costs. While the AI-driven demand cycle is strong and looks set to continue, the key to profitability for these companies will be their ability to manage supply chain costs and successfully shift their product mix toward the high end of the market.
- FC-BGA (Flip Chip-Ball Grid Array): A high-performance type of semiconductor package substrate used for CPUs, GPUs, and other advanced chips that require many connections.
- CAPEX (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.
- CCL (Copper Clad Laminate): A base material for printed circuit boards and semiconductor substrates, consisting of a laminate sheet clad with copper foil.