Japanese MSG company, really stuck the neck of the chip?

Not long ago, an article titled “A Japanese MSG company stuck the neck of chips all over the world” was very popular, which aroused the author’s thinking.

In this article, a product called ABF (Ajinomoto Build-up Film: Ajinomoto Build-up Film) is discussed, and it is pointed out that basically 100% of the world’s computers are using this product. Therefore, The supply problem of this product has directly led to the tight supply of high-end hardware products.

In order to confirm the credibility of this view, the author searched and sorted out some information for reference.

by-products when making monosodium glutamate

According to the data, ABF was invented by the food company Ajinomoto Group. On the official website of Ajinomoto Group, we found such a history:

The story of ABF began in the 1970s, when the group began to explore the application of by-products from the production of umami flavorings. At the time, processors were rapidly evolving, getting smaller and faster, and PCB manufacturers needed better insulation to maintain performance. Ink is the substrate of choice, but coating and drying it slows down production, attracts impurities and creates environmentally harmful by-products.

The Ajinomoto R&D team discovered that the by-product of making MSG can make a resin-based synthetic material with extremely high insulating properties, thus creating a thermoset film with high durability, low thermal expansion, easy processing and other important characteristics , the membrane is named ABF. In 1996, a CPU manufacturer, namely Intel, approached the group seeking to develop thin-film insulators using amino acid technology. As a result, these two companies jointly developed FC-BGA (Flip Chip Ball Grid Array) by chance, resulting in ABF becoming the main solution for CPU FC-BGA products.

  Japanese MSG company, really stuck the neck of the chip?

Source: Ajinomoto Group official website

Why does it say it is stuck on the chip neck? Let’s look down.

ABF carrier board brought back to life

To talk about the importance of ABF, we have to talk about the IC substrate. IC carrier board is an industry between IC and PCB. It is a kind of “special” PCB. There are lines inside the IC carrier board to connect the signal between the chip and the printed circuit board (PCB), mainly for the protection circuit and the fixed circuit. and dissipate heat.

At present, 100% of the global IC substrates are used in the packaging market, which is a kind of high-end packaging. In addition to the growth of the global Electronic product market, with the increase in the complexity of electronic products and the amount of signal transmission, it is also necessary to improve the packaging level. important reason for its growth.

Source: Industrial Technology Research Institute IEK

Among the upstream materials of IC packaging, the cost of the IC carrier board accounts for 30%, and the substrate accounts for more than 30% of the cost of the IC carrier board, so the substrate becomes the largest cost end of the IC carrier board. As one of the raw materials of IC carrier boards, substrates can be divided into rigid substrates, flexible film substrates and ceramic substrates, of which rigid substrates are widely used in the field of consumer electronics.

Hard substrate materials include BT resin, ABF and MIS, and the three materials are suitable for packaging different chips depending on their own characteristics. Compared with the BT substrate, the ABF material can be used as an IC with thinner lines, suitable for high pin count and high transmission, and is mostly used for large-scale high-end chips such as CPU, GPU and chipset. Hot pressing process.

As far as the entire industry is concerned, ABF substrates were once neglected due to changes in mobile phone chip packaging technology, and are now favored with the development of high-performance chips. Since 2017, thanks to the recovery of notebook computers and the rise of cloud and AI applications, the demand for ABF substrates has grown for three consecutive years.

Cloud and AI applications can be said to be the main force driving the demand for ABF. The reason why cloud applications can increase the demand for ABF is that the data centers and network workstations required to set up a cloud environment depend on a large number of servers, Netcom equipment, optical communication equipment, and power supply equipment. Driven by cooling devices, the ICs mounted on servers and switches require a large number of ABF carrier boards.

In addition to cloud and AI applications, 5G and related applications have flourished since 2020. The 5G network deployment process has further increased the demand for ABF carrier boards. The main reason is that the 5G base station may use more than three FPGAs, and the onboard CPU is about Four to five, it also includes various ASICs and more RF components. Furthermore, since the 5G frequency band is higher than 4G, and the signal transmission distance and penetration capability are not as good as 4G, the demand for 5G base stations is about 1.75% of that of 4G base stations. ~2 times, the effect of increasing the production capacity of ABF carrier boards will also be significantly higher than that of 4G base stations.

Overall, cloud, AI, and 5G network construction has increased the demand for ABF carrier boards. According to the data of Tuopu Research Institute, it is estimated that the global average monthly demand for ABF substrates will grow from 185 million to 345 million from 2019 to 2023, with a compound annual growth rate of 16.9%.

hot side

The strong demand brings about the shortage of production capacity. Recently, the tight supply of ABF substrate materials has caused many semiconductor manufacturers around the world, including TSMC, to fall into a production capacity crisis. At present, the shortage of production capacity is no longer a problem of a certain company.

Citing supply chain sources, Digitimes said it was ABF substrate shortages that limited capacity. CLSA pointed out that, driven by the introduction of advanced packaging, the demand for ABF substrates will continue to rise, and the shortage will continue until the end of 2022. According to its research, orders from first-tier substrate factories have spilled over to second-tier factories, coupled with processor upgrades and strong demand for game consoles entering a new round of business cycles, as well as rising demand for non-Chinese 5G base station chips , In addition, under the influence of the above factors such as the temporary closure of the production line by an ABF carrier board supplier, the shortage of ABF carrier boards in the second half of the year is more serious than originally expected.

The ABF carrier itself seems to be more convincing. Shen Shengxing, general manager of Xinxing Electronics, once pointed out in the online legal seminar that the gap in the ABF carrier market has actually widened since the second half of 2018, and some customers who move quickly We have already assured them the production capacity of ABF carrier boards, “so now it is allocated to customers, and it is difficult to grab production capacity.” Some customers make reservations for three to four years and five years in order to ensure production capacity.

The reason for this situation is first of all the source – Ajinomoto Group. Someone in the industry chain revealed that the delivery cycle of ABF has been as long as 30 weeks, and the prediction of the media Digitimes is even more worrying: maybe in 2021, the supply of ABF will still be insufficient. At present, Ajinomoto has not officially responded to this market rumor, but it has not denied it. It only emphasized that “the report of insufficient supply was not issued by this agency” and “the media are welcome to interview.”

Some people may ask, is there no other company to join the competition? The answer is, yes. Not only Ajinomoto, but also Sekisui Chemicals are the suppliers of build-up materials for back-end IC structures. On the other hand, Sumitomo Bakelite and Taiyo Group (Sun Ink) have also begun to join the competition. However, in terms of market share, Ajinomoto accounts for the vast majority, and it is estimated that the global market share exceeds 90%.

The supply of ABF raw materials is already a problem, and the production of ABF carrier boards is not smooth.

The ABF carrier board has maintained an oligopolistic market pattern for many years. Since the line width and line spacing of the SAP process are close to the physical limit (such as bonding force, yield, etc.), the process environment and cleanliness requirements are extremely high, and automation and process stability management are required. Therefore, the investment is huge. The initial investment of 10,000 square meters of production capacity may exceed 1 billion yuan. If there is no major customer order support and capital reserve in the early stage, the certification cycle is 1-2 years (for major customers), and it is difficult for ordinary enterprises to enter. Under these circumstances, there will only be fewer and fewer players who can continue to keep up.

At present, there are few companies in the world that can mass-produce ABF substrates, mainly including: Japan’s Ibiden, SHINKO, Kyecora (mass production of 5/5um), South Korea’s Samsung Electro-Mechanics (SEMCO); Chongqing ATS (mass production of 12/5um) 12um); Taiwan Xinxing, Nandian, etc.

According to data from DigiTimes, the current production yield of ABF substrates from Taiwanese suppliers Xinxing Electronics, Nanya Plastics, and Jingshuo Technology is about 70% or lower. Currently, several companies are gradually working to expand production, but from 2021 to In 2022, their production capacity will probably only increase by about 10%.

At the end of last year, a fire broke out in the Aoyagi factory of IBIDEN in Ogaki City, Gifu Prefecture. According to Japanese media reports, a total of 6 warehouses and 1 steel-frame warehouse were burned down. Industry insiders said that this move will benefit the Taiwanese ABF. Carrier board manufacturers. However, some people in the industry said that IBIDEN’s fire factory mainly produces traditional rigid boards. There are many competitors in this part of the market. It remains to be seen whether Taiwan factories can obtain business opportunities to transfer orders.

Regarding the expansion of global production capacity, although major manufacturers have plans to expand production or build factories, the expansion rate this year is still small, and the main new production capacity will be released in 2022, resulting in the overall market this year is still quite in short supply.

Xinxing Electronics is reportedly considering reusing one of its damaged production facilities to produce ABF carrier boards, but there is no firm start-up time for the plan, so it will be at least a year before the new factory comes online. However, neither company has confirmed this yet. The report also said that, to a large extent, such a small increase in ABF substrates in the past year is due to the extended lead time of ABF substrate manufacturing tools.

At the same time, because of the overall increase in demand for advanced chips, processor developers will naturally prioritize high-end products such as supercomputers, data centers, servers, and advanced client PCs, and ABF carrier board suppliers will naturally prioritize producing high-end products in production. substrate. As a result, the substrates required for entry-level and mid-range processors have shrunk further and market shortages have intensified.

Of course, there are many other reasons for the shortage of chips. For example, the number of 8-inch wafer fabs that have been hotly discussed by the outside world has declined. At present, some manufacturers have begun to increase investment and have adopted strategies such as acquiring 8-inch wafer fabs. There are also lead wires. Bonding packages are in short supply, etc. Digitimes previously reported that so far, the world’s No. 1 chip packaging company like ASE, and OSAT companies including Chaofeng Electronics, Huatai, and Lingsheng have delivered wire bonding packages. The time has been extended by two or even three months, but the OSAT companies have not responded to this. Without sufficient wire-bonding capability, some Display and PC makers will continue to suffer from stockouts of at least one-half of their critical components.

say at the end

Ajinomoto Group is like a butterfly flapping its wings in Brazil. The shortage of its product ABF has caused the current shortage of the semiconductor industry to a certain extent. We can’t deny the impact of other factors on this phenomenon-level shortage, but we have to admit that this MSG company is indeed stuck in the neck of the chip.

Author: Yoyokuo