Samsung Electro-Mechanics and LG Innotek Face Off in Next-Generation Semiconductor Substrate Market

Both Companies Make Large-Scale Investments
Analysis of Strategies to Gain Advantage in the Global Market

[Asia Economy Reporter Kim Jin-ho] South Korea's two major component manufacturers, Samsung Electro-Mechanics and LG Innotek, have both made aggressive investments in semiconductor substrates, drawing attention. This is interpreted as part of a strategy to focus on the substrate market and secure a competitive edge in the global market.

According to the business community on the 24th, LG Innotek held a board meeting on the 22nd and decided to invest 413 billion KRW in facilities and equipment for flip-chip (FC)-ball grid array (BGA) semiconductor substrates.

This investment marks LG Innotek's first FC-BGA investment. The company plans to make additional investments in the future to establish a production line. FC-BGA refers to semiconductor substrates that electrically connect the mainboard to semiconductors with many electrical signals, such as central processing units (CPU) and graphics processing units (GPU).

It has mainly been used in high-performance chips made by Intel, AMD, and Nvidia, but recently, FC-BGA has also been used in electric vehicles, artificial intelligence (AI), and data center markets, leading to a severe shortage of FC-BGA supply, prompting preemptive measures. Industry insiders expect demand for FC-BGA to increase further as the core count of CPUs and GPUs grows, resulting in larger substrate sizes.

LG Innotek plans to target the FC-BGA market by leveraging its industry-leading semiconductor substrate technology. The company currently holds the world's number one position in the communication semiconductor substrate market, including substrates for radio frequency package systems (RF-SiP) and 5th generation mobile communication (5G) millimeter-wave antenna packages (AiP), which have manufacturing processes similar to FC-BGA.

Son Gil-dong, head of LG Innotek's Substrate Materials Division, said, "Based on our semiconductor substrate business capabilities leading the global market, we plan to nurture FC-BGA as a future growth engine," adding, "We will continue to innovate customer experiences to enhance customer value by expanding the substrate business into various industries."

Samsung Electro-Mechanics also decided last month to make a large-scale investment of $850 million (approximately 1.02 trillion KRW) in FC-BGA production facilities. This is part of a strategy to expand FC-BGA substrate supply in response to the increasing demand for high-performance semiconductors and package substrates.

This investment will be made at Samsung Electro-Mechanics' Yenbin Industrial Complex in Thai Nguyen Province, northern Vietnam. Samsung Electro-Mechanics has received approval and investment permits for major contracts from the Vietnamese government. The semiconductor package substrates produced at the Yenbin Industrial Complex connect highly integrated semiconductor chips and mainboards to transmit electrical signals and power.

Among these, FC-BGA connects semiconductor chips and mainboards using flip-chip bumps in the form of balls. It is mainly used in CPUs and GPUs that require high-performance and high-density circuit connections. As semiconductor performance improves and 5G, AI, and cloud expansion continue, high-performance semiconductor package substrates have become increasingly important, driving up demand for FC-BGA.

This content was produced with the assistance of AI translation services.