AI arms race heats up upstream! Report says Intel Corporation (INTC.US), NVIDIA Corporation (NVDA.US), and AMD (AMD.US) prepay over NT$100 billion to lock in high-end IC substrate capacity.

According to Taiwan's Economic Daily News, the three major tech giants NVIDIA Corporation (NVDA.US), Intel Corporation (INTC.US), and AMD (AMD.US), in order to secure key capacity in the AI supply chain, have collectively prepaid over NT$100 billion (approximately US$5 billion) in deposits to Taiwan's high-end IC substrate manufacturers to lock in long-term capacity supply. Driven by this, Taiwan's top three substrate makers - Unimicron, Kinsus, and Nan Ya PCB - have announced a cumulative investment in plant construction totaling NT$161.2 billion this year, setting a record high. Intel Corporation (INTC.US) CEO Lip-Bu Tan previously stated publicly that AI demand is driving demand for advanced packaging and chips, with upstream IC substrate and material supply remaining tight. Multiple customers have proactively paid advances to help Intel Corporation secure substrates and capacity. Based on this, institutional investors estimate that Intel Corporation's long-term prepaid substrate capacity amounts to approximately US$3 billion. AMD (AMD.US) previously announced a US$10 billion investment in Taiwan, which the industry widely interprets as locking in supply chain capacity, with substrate-related investment estimated at approximately US$1 billion; NVIDIA Corporation (NVDA.US) has also announced large-scale capacity expansion plans with multiple core supply chain partners, with outside speculation that its substrate investment in Taiwanese manufacturers is likewise approximately US$1 billion, with the possibility of further increases. Unimicron: Highest capital expenditure among peers, spends NT$10 billion to acquire plant According to the report above, Unimicron ranks first among substrate manufacturers in capital expenditure this year. The company's board of directors previously resolved to add NT$19.7 billion to this year's capital expenditure, bringing the full-year total to NT$53.7 billion, while simultaneously making large-scale purchases of long-lead-time equipment, with related purchase orders increased by a further NT$17.6 billion. In terms of land and plant layout, Unimicron announced at the end of September the acquisition of Bridgestone's Hukou plant and office in Taiwan for approximately NT$10.08 billion, to address customers' future high-end substrate capacity expansion needs. The company's announcement stated that the land acquisition is based on medium- to long-term operational development strategy, aimed at overall production allocation and capacity planning. Kinsus: Transitioning to high-end substrates, three-year expansion budget exceeds NT$40 billion Kinsus has in recent years continued to fade out of traditional PCB production, concentrating resources on transitioning to high-end substrate business. The board of directors has approved capital expenditure of NT$23.5 billion to meet equipment investment needs for ABF substrate capacity expansion over the next three years, of which NT$8 billion is planned for 2026, with NT$6 billion specifically allocated to ABF substrate investment. In addition, the Kinsus board has approved an additional special capital expenditure budget of NT$19.6 billion to further strengthen expansion efforts, bringing the total expansion budget to over NT$40 billion. Nan Ya PCB: Building smart factory, single investment of nearly NT$50 billion Nan Ya PCB's board of directors previously passed a resolution to add capital expenditure for building a smart factory focused on large-size, high-layer-count high-end substrates, with an estimated investment of NT$46.8 billion - the highest single investment among the three manufacturers. AI infrastructure arms race spreads upstream The three major tech giants' combined investment in Taiwan's substrate industry is estimated at US$5 billion (approximately NT$162.9 billion), reflecting the deep reliance of AI infrastructure construction on upstream key materials and packaging substrates. As the core intermediary component connecting chips and circuit boards, substrate supply bottlenecks have directly affected the pace of capacity release across the entire AI supply chain. The model of customers locking in capacity through large prepayments, on one hand, provides demand visibility support for Taiwanese substrate manufacturers' large-scale capital expenditure, and on the other hand, shows that tech giants have elevated supply chain security to the level of proactively binding resources. The cumulative investment announced by Taiwan's major substrate manufacturers this year has hit a record high of NT$161.2 billion, reflecting long-term optimistic market expectations for AI-related substrate demand. This article is reposted from "Wallstreetcn," author: Ye Zhen, GMTEight editor: Wang Qiujia.