Samsung Electro-Mechanics Invests 1.8 Trillion Won in Vietnam... Expands Capacity with Increased Semiconductor Substrate Production

Samsung Electro-Mechanics is set to strengthen its semiconductor substrate production capabilities in Vietnam through a large-scale investment of approximately 2 trillion won. This move aims to further expand capacity and enhance supply competitiveness amid rising demand for semiconductor substrates, driven by recent growth in the artificial intelligence (AI) market.

According to Bloomberg News on April 15, Samsung Electro-Mechanics has decided to invest USD 1.2 billion (approximately 1.8 trillion won) in its Vietnam manufacturing subsidiary to expand production capacity of high-value substrates, specifically flip chip ball grid array (FC-BGA). As a result, the company received an investment registration certificate from the Vietnam Foreign Investment Agency for FC-BGA production related to AI applications.

FC-BGA is a packaging method that combines the flip chip technique-where the chip is flipped so the circuit faces downward and is directly connected to the substrate-with the ball grid array method, which arranges small solder balls on the underside of the substrate to provide electrical connections. This technology enables fast electrical signal transmission and high-density design, making it suitable for the large-capacity and high-speed data processing environments required by AI semiconductors. In particular, as global AI companies build data centers utilizing high-performance chips, demand for FC-BGA substrates is surging.

Exterior of Samsung Electro-Mechanics Vietnam manufacturing subsidiary. Samsung Electro-Mechanics.

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Samsung Electro-Mechanics is also facing challenges in meeting customer orders amid this recent surge in demand. At a recent shareholders' meeting, President Jang Deokhyun told reporters, "Demand for server and data center FC-BGA exceeds our production capacity by more than 50%," adding, "We are making supplementary investments and expanding some of our factories."

In response, the company has begun expanding its substrate capacity. According to its business report, the operating rate of the semiconductor package production facilities rose by about 5 percentage points year-on-year to 70%. The company has also reportedly increased prices for some FC-BGA product lines. Samsung Electro-Mechanics produces FC-BGA at both its Vietnam and Busan sites.

The scale of this new investment is equivalent to the USD 1.2 billion invested in 2013 to establish the Vietnam subsidiary’s camera module and PCB (printed circuit board) factories. Samsung Electro-Mechanics began producing FC-BGA in Vietnam in 2024, and this investment is expected to significantly boost its FC-BGA production capacity.

Recently, Samsung Electro-Mechanics secured a deal to supply FC-BGA for the Groq3 language processing unit (LPU), an inference-only chip installed in Nvidia’s next-generation AI semiconductor ‘Vera Rubin’. Mass production of this substrate is expected to begin in the second quarter of this year. Additionally, Samsung Electro-Mechanics’ FC-BGA is being considered for Tesla’s AI chip ‘AI6’, raising expectations for further expansion into big tech clientele.

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