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Semco boosts investment in ABF substrate production

Samsung Electro-Mechanics (Semco) on March 21 announced that it will expand its ABF substrate production capacity at its Busan plant, bringing its total investment in the segment to KRW1.6 trillion (US$1.32 billion), according to the company.

It will invest about KRW300 billion in the expansion of the IC packaging substrate and construction of production facilities at the Busan plant, Semco said in a press release.

The substrates are mainly used for central processing units (CPU) and graphics processing units (GPU) that require high-performance and high-density circuit connection, it said.

"The semiconductor industry is in desperate need of substrate technology that can meet the increasing performance of semiconductors for servers and PCs due to the surge in demand for digital technology," Semco said.

The company used to focus on making high-density interconnection (HDI) substrates. Its turnover from the substrate business has been shrinking since 2015 due to low price competition with Chinese and Taiwanese rivals, and it started reported losses in 2017 and 2018. It turned to ABF substrate business in 2017 and started showing positive results in 2019, according to industry sources.

Observers in the securities industry forecast that Semco would record a new high of revenues in 2022, expecting its annual revenues and operating profit to reach KRW10.4 trillion and 1.7 trillion respectively.

Driven by the increased demand for high-speeding computing applications, the high-end packaging substrate segment can enjoy an average annual growth rate of 20% through the medium and long terms, the observers said.

There will be continued demand for improving CPU efficiency and increasing the layers and space on substrates, while the shortage of substrates might not ease until 2026, they said.

"Package substrates are facing a new paradigm. System on Substrate (SoS) will become a platform that integrates all systems," Semco CEO Chang Duckhyun said during a regular meeting with shareholders on March 16.