Key points
- Samsung Electro-Mechanics is adding substrate lines in Sejong and Vietnam
- Sejong is its biggest investment ever in one product
- Customers are paying for part of the new equipment
On September 28, Samsung Electro-Mechanics (삼성전기, 009150) announced plans to spend 6.78 trillion won ($4.98 billion) to build more FC-BGA substrate lines at its plants in Sejong, South Korea, and in Vietnam. FC-BGA substrates carry power and signals between chips such as AI accelerators, GPUs, and CPUs and the circuit boards they sit on.
Samsung Electro-Mechanics will invest 4.27 trillion won ($3.14 billion) in Sejong, equivalent to 43.6% of its equity, according to its DART filing. The company calls it the largest single-product investment in its history. Work is scheduled to finish by May 31, 2028, with mass production starting that September.
Another 2.51 trillion won ($1.85 billion) will fund equipment at its Vietnam subsidiary's factory, with installation due by April 30, 2028, according to a separate filing. The investment exceeds the subsidiary's total assets at the end of last year.
"As the AI and high-performance computing markets grow quickly, high-value semiconductor substrates are becoming more important as key parts that decide chip performance and supply chain stability," said CEO Chang Duckhyun (장덕현).
Customers help fund Sejong; reports point to Nvidia
Global big tech and chip customers are paying for part of the new Sejong equipment and have guaranteed orders for the medium to long term, the company said in its announcement, as reported by Etoday (이투데이). No customers were named. Several industry officials told ZDNet Korea (지디넷코리아) that the Sejong lines are being built with advance payments worth trillions of won from global big tech customers, and that Nvidia's share is the largest.
"In the first half of this year, Samsung Electro-Mechanics and Nvidia discussed building a dedicated FC-BGA production line, and they recently confirmed the investment," one person familiar with the matter told ZDNet Korea.
This month has already brought one large deal tied to Nvidia. On September 1, Samsung Electro-Mechanics disclosed a 1.07 trillion won ($788 million) supply contract for MLCCs, the tiny capacitors used in servers and phones. ZDNet Korea reported that the customer is Nvidia.
Rising prices and more capacity
Samsung Electro-Mechanics said in July that FC-BGA prices were still rising and that the company was discussing additional capacity with big tech customers. Monday's announcement gives those expansion plans a budget and a timetable.
Shares fell 1.06% on Monday but remain among the Kospi's strongest performers this year, following an AI-server rally we covered this month. The expansion also follows the company's substrate work for Broadcom chips, which we reported in July.
For more Korean companies supplying the AI buildout, see our Korea AI stocks page.
