Tech & AI
Nvidia adds Samsung Electro-Mechanics as AI chip substrate supplier in push to raise substrate capacity 2.5 times
The Korean parts maker will build dedicated lines in Sejong and Busan under a multi-year deal, as Nvidia also expands packaging capacity with Amkor in South Korea.
HedgeWeekly Tech & AI Desk ·
Samsung Electro-Mechanics (SEMCO), the electronic components unit of Samsung Electronics, said it has signed a multi-year strategic partnership with Nvidia to supply package substrates for AI chips, with deliveries starting this year. The deal was announced on October 21 at Nvidia's GTC event in Berlin. A package substrate is the multi-layer base that connects a processor to the circuit board; the advanced type used here, known as ABF substrate, is hard to make at the large sizes AI chips require.
The two companies will jointly invest in dedicated production lines at SEMCO's sites in Sejong and Busan in South Korea, according to the company. SEMCO will supply substrates for Nvidia's compute chips and for high-speed networking switches, and expects volumes to grow at a double-digit annual rate. By 2028, production allocated to Nvidia is projected to account for a significant portion of SEMCO's total annual package substrate capacity. Neither side disclosed financial terms.
Nvidia said its agreements with SEMCO, Japan's Ibiden and Taiwan's Unimicron will help it raise substrate capacity 2.5 times over the next three years. Separately, Nvidia and US-based Amkor Technology plan to expand advanced packaging in South Korea, targeting a more than 300% increase in interposer wafer capacity by the end of 2028. An interposer is a silicon layer that links a processor to the memory chips stacked beside it. SEMCO shares gave up early gains in Seoul on October 22 as Korean chip stocks sold off, according to Newsquawk.
Why it matters: substrates and advanced packaging, not just leading-edge wafers, have become choke points for AI accelerator output, and Nvidia is now co-funding capacity at suppliers to secure them. The deal gives SEMCO direct exposure to AI accelerator demand alongside established suppliers Ibiden and Unimicron, and deepens South Korea's role in Nvidia's supply chain alongside Samsung Electronics and SK Hynix. Watch for disclosure of investment amounts, the ramp-up timing of the Sejong and Busan lines and any effect on substrate pricing.