AMD and Intel Invest in Substrate Production to Fight Shortages

There a numerous causes that have led into the ongoing computer component shortage, one of which is the lack of availability of materials called ABF substrates. The Good news is that companies like AMD and Intel are taking the problem seriously and are investing in packaging facilities and production of substrates. 

A wide variety of chips from inexpensive entry-level processors for client PCs to complex high-end CPUs for servers use laminated packaging. Usually, chips that use laminated packaging also use IC substrates featuring insulating Ajinomoto build-up films (ABF), which are made by just one company, Ajinomoto Fine-Techno Co.

While there are dozens of companies that package chips and use ABF substrates, there is only one ABF supplier that has to serve them all. But as it transpired this year, the Japanese company is not the bottleneck here, but OSAT (outsourced assembly and test) houses like ASE Technology are. 

Earlier this year, numerous top packaging houses vowed to increase their production capacities. But for large companies, a tangible capacity increase is complicated, as equipment vendors can't simply increase their output overnight. But now even second-tier OSAT players have announced plans to expand their capacity already. For example, Kinsus plans to raise its ABF substate capacity by 30% this year, DigiTimes reports. But chip packaging houses are not the only companies that can address issues with chip packaging.   

AMD used to own assembly, test, mark and pack facilities, but sold them in 2016 when it was in dire need of money. Apparently, AMD wants to address its chip shortages by investing in OSAT and substrate partners to gain capacity that is dedicated to AMD. 

"We continue — on the substrate side in particular, I think, there has been underinvestment in the industry," said Su. "So, we have taken the opportunity to invest in some substrate capacity dedicated to AMD, and that’ll be something that we continue to do going forward." 

Intel has its own chip production as well as test and assembly facilities in multiple countries. But apparently the in-house packaging capacities are not enough for Intel, which significantly increased its chip output capacities in the recent year following shortages it faced in 2018 – 2019. In a bid to meet demand for its products, Intel is working with its third-party substrate partners. 

"By partnering closely with our suppliers, we are creatively utilizing our internal assembly factory network to remove a major constraint in our substrate supply," said Pat Gelsinger, CEO of Intel, during a recent call. "Coming online in Q2, this capability will increase the availability of millions of units in 2021. It is a great example where the IDM model gives us flexibility to address the dynamic market." 

Eventually AMD admitted that it could not meet demand for its products because it could not procure enough chips from its manufacturing partners and because its OSAT partners did not have enough capacity to test and pack its chips too. 

Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.