Samsung, LG expand chip business with next-generation substrate tech

By Baek Byung-yeul

Samsung Electro-Mechanics and LG Innotek, the two major IT component makers here, are trying to expand their presence in the market with a next-generation semiconductor packaging substrate called flip chip ball grid array (FCBGA), beefing up investment in the sector to compete against Japanese and Taiwanese competitors, company officials said, Tuesday.

A semiconductor package substrate technology protects and ensures precise connection between IC chips and mainboards for reliable transmission of electrical signals.

The industry estimates demand for these substrates, which are used for high-performance chips, will soar as more chips are increasingly used for emerging technologies such as the 5G network, artificial intelligence (AI) and autonomous driving technologies that require strong performance and high-density circuit connection.

The FCBGA market is currently led by Japan's Ibiden and Shinko and Taiwan's Unimicron and Nan Ya.

To catch up to the leading companies, Samsung Electro-Mechanics said Monday that it decided to invest 300 billion won ($245.5 million) to expand its FCBGA production line in Busan.

The 300 billion won is an additional investment following the decision to invest 1.3 trillion won in package substrate production facilities in its Vietnamese plant. In total, Samsung Electro-Mechanics' investment to expand its package substrate business has increased to 1.6 trillion won.

“The FCBGA business is expected to grow in the future as demand for high-performance semiconductors increases. CEO Chang Duk-hyun also told investors at the shareholders' meeting that the substrate business will likely see increasing demand from server, network and high-end PCs.”

Samsung Electro-Mechanics said that FCBGA is expected to grow by more than 14 percent annually in the mid to long term as demand for various applications requiring high-speed signal processing such as servers and networks increases.

In February, LG Innotek also announced a plan to invest 413 billion won in the construction of FCBGA facilities. This was the first time that the company unveiled a detailed investment plan in the FCBGA business and the company plans to continue to increase its investment in the future as well.