Nvidia Expands Substrate Capacity 2.5-Fold and Adds Samsung to Supply Chain

Nvidia announced at the GTC conference in Berlin a plan to increase the production capacity of silicon substrates for its products 2.5-fold over three years, in an effort to alleviate a bottleneck affecting the AI hardware supply chain. CEO Jensen Huang stated that demand for AI hardware is massive, but production capacity is the constraint.

To achieve this, the company added Samsung Electro-Mechanics to its substrate supply chain, leveraging immediate capacity at a plant in South Korea, with nearly a quarter of Samsung's substrate output set to go to Nvidia by 2028. Nvidia also expanded its agreement with Japan's Ibiden, with plans to triple production at one of its plants, and signed a capacity reservation agreement with Taiwan's Unimicron involving a plant expansion.

The plans were not limited to substrates. Nvidia signed a capacity reservation agreement with South Korea's Amkor for silicon packaging, which includes a 300% expansion of the partner's capacity, stating that the deal will support larger production volumes for current and upcoming platforms. It also expanded its agreement with optics company SPIL to increase production capacity 15-fold by mid-2027, and double it again by the end of 2028.

The Register's report notes that it is not unusual for manufacturers to invest in their suppliers, because it helps create certainty and spread financial risk. It adds that announcing these deals at a major tech conference suggests Nvidia feels the need to show investors it is working to ensure it can meet demand, and that demand will persist for years.

What Do These Terms Mean?

Silicon Substrate: A flat piece of silicon on which microcircuits are built, serving as a foundation in chip manufacturing before cutting and assembly.

Advanced Packaging: A technology that integrates chips and interconnects into a single high-efficiency unit, directly impacting processor speed and data transfer capabilities.

Capacity Reservation: An agreement that guarantees a company a share of a supplier's factory capacity for a specified period in exchange for a financial commitment or support for factory expansion.