The Stack
Status Tightening as of 26 Oct 2026: buyers fund the factory. Nvidia and Tesla are reported to put $2.8B into Samsung Electro-Mechanics' substrate lines and chipmakers have prepaid Taiwan's substrate makers, but the glass cloth inside every substrate is still short.
Semiconductors
Advantest builds the automated testers that check AI processors and memory before they ship. Demand is outrunning its factories, and the DRAM inside each tester is getting scarce, so building testers is the step that binds.
Semiconductors
Tokyo Electron sells the coater/developer tracks that sit beside every scanner, plus etch, deposition and clean: it gets paid when a tool or Field Solutions is recognised, while the die still waits on an ASML slot.
Semiconductors
KLA sells the inspection and metrology tools that check the wafer: it gets paid when a system is recognised, while the die still waits on an ASML slot.
Semiconductors
Lam Research sells etch and deposition chambers: it gets paid when a system is recognised, while the wafer still waits on an ASML slot.
Semiconductors
Applied Materials sells deposition, etch, polish and implant tools: it gets paid when a chamber is recognised, while the wafer still waits on an ASML slot.
Semiconductors
ASML sells lithography scanners and the upgrades that keep them running: it gets paid when a Low-NA EUV box is recognised, while 2027 Low-NA is already close to fully ordered.
Home / The Stack / Semiconductors
Semiconductors turn AI designs into chips that ship: design, foundry wafers, HBM memory stacks, advanced packaging, substrates, the materials inside them, optics, test, and the tools behind each step. This Stack layer tracks who gets paid in that chain, and which step is holding the cash.
Topic hubs: HBM · CoWoS · Company models: TSMC · SK hynix · Micron · ASML · Applied Materials · Lam Research · KLA
Status: Tightening · Updated: 2026-10-26
Investor read: On 22 October this page said the buyer had prepaid past the wafer and that substrates bind to 2028. This week the buyers went further and paid for the substrate factory itself. On 22 October Korea's Maeil Business Newspaper reported that Nvidia and Tesla will put about ₩3.7 trillion, roughly $2.8 billion, into Samsung Electro-Mechanics' new substrate lines at Sejong. Two days later Taiwan's Economic Daily News reported industry talk that Intel, Nvidia and AMD have paid more than NT$100 billion in deposits to Taiwan's substrate makers, which have announced a record NT$161.2 billion of new plants this year. Money for buildings and tools is no longer the problem, and the makers say so. At the Taipei board show Kinsus called its tool risk relatively controllable and named materials as the real risk: the low-expansion glass cloth, or T-glass, in the core of every large AI substrate, where it sees a 5% to 15% gap that widens in 2027. Thin cloth and laminate are expected to cost 10% to 15% more from November, and the shortage is spreading to memory substrates. The buyers can fund the factory. They cannot fund cloth that has not been woven. Buyers fund the factory. Glass cloth binds.
| Figure | Reported | |
|---|---|---|
| Samsung Electro-Mechanics, Sejong | Nvidia about ₩2.6tn + Tesla about ₩1.1tn = ₩3.7tn (about $2.8B) for FC-BGA lines · mass production from 2H 2028 · Sejong budget ₩4.27tn | Maeil Business, citing industry sources, 22 Oct 2026 |
| Taiwan substrate deposits | More than NT$100bn (about $5B) said to be paid by Intel, Nvidia and AMD · analyst estimates, not confirmed | Economic Daily News, 24 Oct 2026 |
| Taiwan's big three build-out | Record NT$161.2bn of plant investment announced this year by Unimicron, Kinsus and Nan Ya PCB · Unimicron 2026 capex NT$53.7bn | Economic Daily News, 24 Oct 2026 |
| Kinsus ABF capacity | 40M units a month (2026) → 80M (2029) · customers fund the tools · new capacity lands 2028–2030 | SETN, from the TPCA Show, 21 Oct 2026 |
| Kinsus on the risk | Tool risk "relatively controllable" · materials are the real risk · T-glass gap 5–15%, widening in 2027 · industry 2027 estimate 20–30% | SETN, 21 Oct 2026 |
| Glass cloth and laminate prices | Expected up about 10–15% as early as November · thin cloth tightest · relief 2H 2027 or 2028 | TechNews, citing the supply chain, 22 Oct 2026 |
| Memory substrates (BT) | SEMCO ₩360.5bn one-year deal with a global memory maker · BT makers at mid-80% utilisation · ABF capacity >2× by 2028 vs BT about +15% | Kiwoom Securities via Edaily, 20 Oct 2026 |
| Board maker (TTM) | Data center and networking sales +115% to $493.6M · commercial book-to-bill 2.5 · laminate and T-glass lead times 12, sometimes 24+ weeks, "going up" | TTM release and call, 22 Oct 2026 |
| Bonder maker (Besi) | Orders €342.6M (+96% y/y) · Q4 revenue flat, paced by customers' H1 2027 lines | Besi, 22 Oct 2026 |
| Wafer tools | Enough tools for "probably 2X" leading-edge wafers, "not 10X" · tools ordered now arrive in about 18 months | Intel CTO Pushkar Ranade via The Next Web, 23 Oct 2026 |
| Our arithmetic | Nvidia + Tesla ≈ 87% of the Sejong budget (upper bound) · Kinsus 2× in three years ≈ 26% a year · deposits ≥ about 62% of the NT$161.2bn announced (different scopes; estimate on estimate) | Ours, on the prints above |
Read the table in three blocks: buyers paying for substrate plants that start in 2028; what those plants still have to buy, glass cloth and laminate first; and the steps around the substrate, each paced by something other than money.
An AI accelerator gets paid for in this order:
This layer sits upstream of Hyperscalers and Neoclouds, which buy the finished systems, and of AI Data Centers, which house them. Chips, memory, packaging, substrates and their materials, optics, test and tools stay here.
Who gets paid first now: makers of the scarcest inputs — T-glass, thin cloth and laminate — who are sold out and expect higher prices from November; substrate makers, paid by the buyer before the plant is built; and board makers whose orders run well ahead of shipments. Who waits: funded substrate lines that reach mass production only in 2028; buyers who did not prepay; and bonder and tool makers whose machines ship only when the customer's line is ready. Who carries the risk: the buyer that prepaid, if the plant arrives late or its demand falls; and the substrate maker, if a funded line cannot get enough qualified cloth to run full.
On 18 October this page put the stuck step at scanner slots for 2027 and 2028. On 22 October it moved past the wafer, to substrates, with the buyer prepaying for capacity. This week showed what that money buys and what it cannot. It buys buildings and tools. It does not buy the glass cloth those lines run on.
1. The buyer funds the factory — PRIMARY (new 2026-10-26). On 22 October the Maeil Business Newspaper reported, citing industry sources, that Tesla will invest about ₩1.1 trillion and Nvidia about ₩2.6 trillion to build FC-BGA substrate lines at Samsung Electro-Mechanics' Sejong plant. Reuters carried it at $2.8 billion. Tesla gets five years of supply from 2029. The building is due by the end of 2027, with tools and trial runs through the first half of 2028 and mass production from the second half. Samsung Electro-Mechanics filed a ₩4.27 trillion Sejong budget in September. On our arithmetic the two sums equal about 87% of it, an upper bound because Nvidia's money also covers Busan. Neither buyer has published the amounts. See the Wire on the $2.8B Sejong investment.
2. Taiwan's makers get deposits and spend a record — SECOND PRINT. On 24 October Economic Daily News reported industry talk that Intel, Nvidia and AMD have paid more than NT$100 billion, about $5 billion, in deposits to reserve long-term capacity at Taiwan's high-end substrate makers. The split is an analyst estimate: about $3 billion for Intel and $1 billion each for Nvidia and AMD. The makers do not comment on single customers. Their spending is on the record: Unimicron, Kinsus and Nan Ya PCB have announced a record NT$161.2 billion of plants this year, and Unimicron has lifted 2026 capital spending to NT$53.7 billion. On our arithmetic the deposits equal at least about 62% of the plants announced, though one figure is an estimate and the two cover different years. Either way, the buyers carry much of the cost of the building. See IC substrates and ABF explained and the Catalyst on Nvidia's 2.5x substrate plan.
3. The substrate maker says the risk is the cloth, not the tools — THIRD PRINT. At the Taipei board show Kinsus set out a plan to double its ABF substrate output from 40 million units a month in 2026 to 80 million in 2029, with customers paying for the equipment; on our arithmetic about 26% more each year. It called the equipment risk relatively controllable, because its new capacity lands from 2028 to 2030. The real risk, it said, is materials. Its gap in T-glass, the low-expansion cloth that keeps a large substrate flat when the chip heats up, swings between 5% and 15% and should widen again in 2027 as customers launch new platforms. It is asking customers to move some designs to ordinary E-glass, proposing hybrid cores and qualifying new suppliers. Industry estimates put the 2027 T-glass gap at 20% to 30% even after Nittobo, the leading maker, adds capacity, in line with Unimicron's 20 October warning that some key materials could be about 20% short. Glass and ceramic cores are not expected in volume before 2029. A deposit can buy a plant. It cannot buy a loom that is already booked. See the Taiwan note on the glass cloth squeeze and the Analysis: if substrates stay short through 2028.
4. The thin cloth and the laminate reprice — FOURTH PRINT. On 22 October TechNews reported that the supply chain expects glass cloth and copper-clad laminate prices to rise about 10% to 15%, as early as November. The thin weaves known as 2116, 1080 and 1078 are tightest, because weavers moved looms to the special AI grades, and much of the new capacity due in 2027 is thick cloth. Relief is not expected before the second half of 2027, possibly 2028. These are expectations, not price lists. The same day TTM, a US board maker whose data center and networking sales rose 115%, said laminate and T-glass lead times run about 12 weeks, sometimes 24 or longer, and are going up, while its commercial orders ran at 2.5 times shipments. See the Catalyst on TTM's board orders.
5. The shortage spreads to memory substrates — FIFTH PRINT. On 19 October Samsung Electro-Mechanics disclosed a ₩360.5 billion supply deal with a global memory maker. Kiwoom Securities read it as next year's volume of BT substrates, the cheaper boards memory chips sit on, and called an annual contract like this unusual. BT makers already run in the mid-80% range of capacity. Kiwoom expects ABF capacity to more than double by 2028 while BT grows only in the mid-teens percent, and a BT shortage in 2027 and 2028. That is a broker view. Both kinds of substrate use glass cloth in the core. See what Micron does and the Analysis on SK hynix's back end.
6. Around the substrate, machines wait on lines — SIXTH PRINT. On 22 October Besi, which makes chip-bonding machines, reported third-quarter orders of €342.6 million, up 96% on a year earlier, with hybrid-bonding orders so far this year more than double all of 2025. It guided fourth-quarter revenue flat because deliveries are timed to customers' lines for the first half of 2027, not because orders moved out. On our arithmetic orders ran about 1.21 times revenue. Upstream, Intel's chief technology officer Pushkar Ranade said the world has tools for probably twice today's leading-edge wafer output, not ten times, with about 18 months to deliver. The 18 October tool queue stands. See the Wire on Besi's orders and High-NA EUV explained.
Demand is not the bind. Buyers such as Amazon say their AI capacity is booked well ahead. They are short of time on a step money cannot hurry, not of cash. Our read, labelled as ours: substrate makers with secured cloth, or designs qualified on alternatives, fill funded lines first. See the Wire on AWS sold out into 2028.
So the stuck step, named plainly: the buyers are now paying for the substrate factories as well as the capacity. Those factories run from 2028, and the makers say the risk is the glass cloth inside every board, not the tools. The thin cloth and laminate reprice from November, and the shortage is spreading to memory substrates. Buyers fund the factory. Glass cloth binds.
Roles only — not a leaderboard, not a buy list.
| Role | Examples | What they do in this layer |
|---|---|---|
| Glass yarn and cloth | Nittobo, Taiwan Glass, Nan Ya Plastics, Fulltech, China Jushi | Weave the glass cloth every substrate and board core is built on; T-glass is the tightest grade |
| Laminate and film | Copper-clad laminate makers (e.g. Elite Material, Kingboard), Ajinomoto (ABF film) | Press cloth, resin and copper into laminate; supply build-up film |
| Substrate makers | IBIDEN, Unimicron, Samsung Electro-Mechanics, Kinsus, Nan Ya PCB; BT: Daeduck, Simmtech | Build the layered board the chip package sits on; now partly funded by the buyers |
| Board makers | TTM and other high-layer PCB makers | Build the server, switch and accelerator boards the package is mounted on |
| Packaging, test and bonders | TSMC (CoWoS), Amkor, ASE/SPIL, KYEC, JCET; Besi (bonders) | Join dies and memory, test parts, sell stacking machines |
| Foundry and toolmakers | TSMC, Samsung Foundry, Intel Foundry; ASML, Lam Research, Applied Materials, KLA, Tokyo Electron | Make the wafers, and the machines for each new wafer line |
| Chip and system buyers | Nvidia, AMD, Intel, Tesla, hyperscalers | Reserve and now fund substrate, packaging and test capacity with their own cash |
Always verify listing, ADR, and tax treatment for your own jurisdiction. Names here map roles. They are not recommendations.
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Because buyers are now paying for substrate plants that do not reach mass production until 2028, the substrate makers say the glass cloth those plants need is short and the gap widens in 2027, cloth and laminate prices are expected to rise from November, and the shortage is spreading to memory substrates. We would ease if cloth makers bring new low-expansion capacity forward, or if substrate makers report the gap closing.
The 22 October desk led with Prepaid past the wafer / Substrates bind to 2028: Nvidia paying substrate, packaging and test makers in advance for capacity. This update shows buyers now funding the substrate factories themselves, and the makers saying the limit has moved inside the substrate, to the glass cloth it is built on. The headline becomes Buyers fund the factory / Glass cloth binds.
A low-expansion glass-fibre cloth. It barely grows when it heats, which keeps a large chip substrate flat so the connections do not crack. The bigger the AI package, the more of it the substrate core needs. A few makers, led by Japan's Nittobo, produce the top grade.
They can pay, but cloth needs glass furnaces, yarn and weaving lines that take years to add, and much of the new capacity coming is thick standard cloth, not the special or thin grades that are short. Switching a design to a different cloth also needs new testing.
No. The amounts come from a Maeil Business Newspaper report citing industry sources, carried by Reuters. Nvidia named the partnership but gave no figure, and the companies have not published the sums. The ₩4.27 trillion Sejong budget was filed by Samsung Electro-Mechanics in September.
Not investment advice. Do your own research. The 87%, 62%, 26% a year and 1.21× figures are our arithmetic on the reported figures. Deposit splits are analyst estimates as reported by Economic Daily News; BT capacity growth is a Kiwoom Securities forecast; price rises are supply-chain expectations as reported by TechNews.
Last updated: 2026-10-26 · Second Order by TKN
