This obscure Taiwanese firm's 1,219% rise shows profit, pain of chip crisis

Business Standard This obscure Taiwanese firm's 1,219% rise shows profit, pain of chip crisis

Nan Ya Printed Circuit Board Corp. is hardly a household name in the tech industry. But the obscure Taiwanese company makes an essential component for chipmaking that has become the latest bottleneck for automakers and electronics companies suffering from semiconductor shortages.

The component goes by the unwieldy name of Ajinomoto build-up film (ABF) substrate and it’s one of the least glamorous niches in the chips industry. It’s part of the packaging that protects the handful of chips needed to power your computer or car and allows communication among them.

Many of the world’s most advanced semiconductors can’t run without the substrates. So while giants like Intel Corp. and Taiwan Semiconductor Manufacturing Co. spend hundreds of billions trying to

alleviate chip shortages, the lack of that single component could hinder production for years.

Supplies are likely to remain constrained until at least 2025 due to limited capacity, according to people familiar with the matter.

Top executives from Intel, Nvidia Corp. and Advanced Micro Devices Inc. have all warned about shortages in recent months. Broadcom Corp. recently told customers the lead time for its main router chips is going up from 63 weeks to 70 weeks due to a lack of substrates, according to one person, who asked not to be named as the information is not public.

The crunch shows how vulnerable global supply chains remain to disruptions almost two years into the Covid-19 pandemic. Companies and investors have almost no visibility into where the next shock could come from.

“This crisis caught a number players off guard,” said Peter Hanbury, a partner at Bain & Co. “As demand for PCs, gaming cards and cloud services increased with Covid-19 and working from home, this critical component suddenly became a real bottleneck for many players such as AMD and Nvidia.”

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