Deep|Ibiden: The Substrate Seller’s Market Has Only Just Begun

Executive Summary

Ibiden’s (4062 JP) core driver remains qualified high-end ABF capacity failing to keep pace with the area and layer count of AI silicon. Intel/AMD server CPU shipments grow +36%/+62% in 2027 on new platforms 56–63% larger in substrate area, widening the CPU gap further. GPUs and EMIB-T consume the highest-end capacity: Rubin yields only 12 units per panel, TPU V9 / Trainium 4 only 4. The next pricing step falls on 27Q1 contract renewals, where new products can price above legacy agreements. We forecast FY3/27 / FY3/28 revenue growth of 35% / 30% and EPS of JPY173 / JPY267; at ~45x FY3/28E PE the shares still have rerating room, with the FY27Q2 results call the near-term catalyst.

• CPU demand is back and widens the supply gap. Resident agents such as Muse push workloads back onto CPUs via headless browsers and high-frequency API calls, and Intel can currently fill only ~50% of orders; shipments have upside if capacity allows. FUNDA models Intel server CPU shipments of 26.5mn units in 2027E (+36%) and AMD 20.4mn (+62%); multiplied by substrate area 63% larger for Diamond Rapids vs. Granite Rapids and 56% larger for Venice vs. Turin, substrate-area demand grows far faster than unit count. Supply is not only limited but already allocated: tier-1 and tier-2 makers are all full as of 26Q4, lead times are 48–52 weeks, total 2027 capacity grows only ~10–15%, and a visible shortfall opens from 27Q1. Customers that did not co-fund capacity sit lower in the allocation queue. This is already visible at Ibiden: AMD substrate revenue declines sequentially through 2H FY3/27 as capacity temporarily allocated to AMD returns to Intel; this does not reflect weaker AMD demand.
• GPUs and EMIB-T consume the highest-end slice of capacity. Blackwell is 73×81mm at 14 layers; Rubin 83×97mm at 18 layers, an estimated 1.8x the area; Rubin Ultra more than 2x Blackwell’s area at ~3x the price. EMIB-T is more extreme: Google TPU V9 at ~120×120mm, 24 layers with a multi-layer core, and Amazon Trainium 4 at ~120×120mm, 24 layers with a multi-layer core, each yielding only 4 substrates per panel. Even if ASIC unit growth looks modest, what truly consumes capacity is area, layer count and yield (core-stage yield on a multi-layer core drops from 99.9% to 97–98%, and a core defect can render all subsequent build-up layers worthless).
• Substrate price increases continue, supporting Ibiden’s new-product pricing. This year’s increases came mainly from Taiwanese makers; Ibiden only removed its quarterly price-decline assumption and normalized Intel pricing to a fair level. Next year, with the industry shortfall in place and lead times at 48–52 weeks, the next customer contract renewals fall in 27Q1 and new products can secure better quotes; new T-glass suppliers are also expected to qualify in 27Q1, and with Chinese and Taiwanese suppliers raising prices Ibiden also has room to pass through costs, while substrates remain under 10% of chip cost so we expect customers to accept the increase. We have not yet seen specific quotes, but we think a price increase is likely.

Business Overview

Ibiden (4062 JP) is a Japanese electronic-materials company built around high-end IC package substrates (FC-BGA / ABF). Founded in 1912 and headquartered in Ogaki, Gifu Prefecture, its core product is high-end ABF substrates produced on a semi-additive process (SAP), used in AI GPUs, AI ASICs, server CPUs and networking switch ICs. Historically anchored on Intel CPU substrates, the company is now shifting rapidly toward AI accelerators, where its competitive strengths are yield on large, high-layer-count substrates, first-qualification capability on new designs, and close relationships with Japanese materials and equipment suppliers. The lowest unit price is not the main consideration.

Products & Services

Electronics (58% of FY3/26 revenue, ~68% in FY3/27E): the growth engine. IC package substrates dominate the segment. FY3/26 revenue JPY243.3b, operating profit JPY45.2b (18.6%); FY3/27 guidance JPY375.0b / JPY110.0b (29.3%). The customer base is led by NVIDIA, Intel and AMD.

Ceramics (20%). Diesel particulate filters (DPF), SiC ceramic fiber and specialty carbon products for semiconductor processing. FY3/26 revenue JPY82.6b, operating profit JPY7.6b. FY27Q1 revenue rose 24% YoY on temporary DPF replacement demand, but this is not a medium-term growth driver.

Others (22%). Construction materials, synthetic resins and petroleum products; operating margin ~10–12%, a stable but low-growth contributor.

Near-Term Focus: FY27Q2 Results