Question: What's stopping AI chips from reaching data centers right now? | You may have thought water fabs, but they're three weeks behind. Packaging is also not quite right. So then what is it? | Substrates. Those invisible circuit boards between the chip and the server, which most investors have never heard of, are about to get very loud. |
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| | The Foundation Nobody Talks About | Imagine holding a perfect AI chip with water fab and packaging done right, and HBM is stacked with precision. However, it cannot communicate with the server without substrates. | As a high-density circuit board, the substrate bridges the gap between the chip and the server. The board carries power and transmits data at the speed of light without compromising physical stability. | What's a chip without a substrate? A costly paperweight. | Without a substrate, even a perfect AI chip is just an expensive paperweight. | The substrates of AI chips have over 20 layers of copper wiring. A single defect in any of these layers renders the entire package unusable. | The Shortage Nobody Saw Coming | CoWoS packaging is booked for the entire year 2026, and HBM is sold out. However, even if both are ready, substrate availability would still be a key factor in determining the number of AI accelerators shipped each quarter. | But why the crunch? | Substrates have a long lead time, ranging from 8 to 12 weeks (standard) to 20 to 30 weeks (advanced). New substrate factories take 2–3 years to build and qualify. Add another 6–9 months for ramping. There is also a 12–24 month wait to use specialized laser drills and deposition tools, which, when combined, result in a structural undersupply. |
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| | | | | Your Next Chance To Cash In On Gold's Run | If you missed out on gold's recent run… | You've been given a second chance. | Because the gold market is moving to the next phase. | Something we call the Golden Paradox. | It's a hidden opportunity that's played out for nearly 100 years. | A way that could've helped investors make 31 times more… | 65 times more… | Even 469 times more than just buying gold. | To solve this Golden Paradox, click here. |
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| From Invisible to Indispensable | Substrates are growing. Aggressively. | 2024 Market Size: $10.5 to 16.7 billion 2030 Conservative Forecast: $15 to 18 billion 2030 Aggressive Forecast: More than $30 billion
| Though organic ABF substrates dominate the market, glass-core substrates are also growing at ~14% CAGR through 2030. Meanwhile, high-density interconnect substrates command premium pricing. | ABF substrate lead times increased by more than 35 weeks in 2025, and spot prices are rising by 25% over the contract levels. | The Five Companies That Control Your AI Future | With a tight supply, the market is dominated by a few companies. Here are the major ones: | Ibiden — Japan-based top-tier AI substrate player Unimicron — Major TSMC supplier from Taiwan Shinko Electric — Now private, the Japan-based supplier has a high-end focus Nan Ya PCB — Another Taiwanese company with scaling AI capacity AT&S — European player in advanced substrates
| But wait — it does not end here. | Material supply is MORE concentrated than substrate supply. | Ajinomoto dominates the market for ABF build-up film — the core material for substrates. This market alone is expected to grow from $0.6 billion to more than $1.3 billion by 2033. | The Geographic Risk Nobody's Pricing In | Here's the number that gives nightmares to AI stock investors | Over 90% of advanced substrate capacity sits in East Asia (Taiwan, Japan, South Korea, and China). A natural disaster, power shortage, or geopolitical tension could successfully halt global AI production. | The threat is real, and the U.S. has noticed it, building domestic capacity: | Absolics (SKC) — Building 120,000-sq-ft glass-core plant in Georgia: | Up to $75 million in CHIPS Act funding The target is 12,000 square meters per year Mass production expected late 2025
| Other CHIPS-backed substrate projects: | Applied Materials — up to $100 million for silicon-core R&D Analog Devices — up to $105 million for advanced packaging expansion Coherent — up to $79 million to scale SiC substrates
| It's a start. |
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| | Your Investment Cheat Sheet | Here's the critical insight: emerging markets comprise just 7% of international portfolios despite representing 40% of global GDP. This systematic under-ownership means any sustained dollar weakness could trigger a massive rotation as investors rebalance. | Global FX turnover hit a record $9.6 trillion daily in 2025, up 28% since 2022. The Mexican peso now trades $153 billion daily, while the rupee and renminbi continue gaining liquidity. |
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| | Where the Smart Money is Flowing | Think of substrates as a strategic gatekeeper with a concentrated market, geographical risks, and slow expansions. | Winners: | Advanced substrate suppliers (Ibiden, Unimicron, AT&S) — over 30% margins, pricing power Material suppliers (Ajinomoto, Shin-Etsu) — oligopoly control Equipment makers (laser drilling, deposition tools) — 12–24 month backlogs CHIPS-aligned firms — subsidies reducing capital risk
| Losers: | Server OEMs with limited pricing power Smaller AI companies without long-term contracts Integrators exposed to rising BOM costs Even hyperscalers can face delays if substrate capacity lags
| What to Watch (Next 12-24 Months): | Substrate lead times (weeks) — currently over 20 to 30 weeks Capacity expansion announcements — new fabs take 2–3 years Glass-core substrate commercialization — potential game-changer Ajinomoto ABF capacity updates Regional diversification outside East Asia
| Red Flags: | Lead times beyond 35 weeks indicate the supply crisis is worsening Yield write-downs at substrate suppliers signal quality issues Geopolitical tensions in Taiwan/Japan risk 90% of capacity Equipment delivery delays are extending
| Bullish Signals: | New substrate capacity coming online Glass-core substrate commercial wins Yield improvement announcements U.S./European capacity expansions accelerating
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| | The Bottom Line | Beyond background components, substrates, and materials determine the number of AI systems that will reach the market has grown to determine the number of AI systems that will reach the market. We cannot ignore them when recognizing revenue or pricing power. | In the growing market, with limited capacity, expansion is also restricted. | You may not see them, but the AI boom is built on layers, and these invisible layers now carry very real financial weight. | Remember this investment thesis: the foundation matters more than the tower. | And right now, that foundation is cracking under pressure. |
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| | | | | Important disclosures: This newsletter is provided for informational purposes only and does not constitute investment advice. All investments involve risk, including possible loss of principal. Please consult with your financial advisor before making investment decisions. |
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