Imagine a sheet made of microscopic fiberglass, thinner than a human hair, produced worldwide primarily by a Japanese company. "Glass cloth" like this is crucial in the production of AI chips, and its shortage is affecting global technology manufacturers such as Apple and Nvidia...
That's what's happening in the global chip and PCB industries right now - the cloth-like material known as T-glass comes almost entirely from a century-old Japanese textile company, Nittobo, which doesn't expect to add significant new capacity until later this year.
Daiwa Securities analyst Noritsugu Hirakawa pointed out, "The T-glass manufacturing process is complex, and it will be difficult for competitors to catch up with Nittobo in the short term."
The shortage of T-glass highlights the supply chain pressure caused by the artificial intelligence boom. AI companies are hoarding large amounts of electronic components such as memory chips, while related manufacturers are scrambling to buy raw materials.
According to industry insiders, AI companies such as Nvidia have strong financial resources and often have priority in obtaining parts supply. Consumer electronics products are likely to be hardest hit by shortages due to their lower priority. Nittobo has warned that "new production lines are still difficult to fill the gap between supply and demand."
At present, Nittobo has stated that it plans to increase prices within the year, and Citi analysts predict that the increase may reach more than 25%. Such price increases are likely to eventually be passed on to the prices consumers pay for smartphones and laptops.
T-glass is indispensable
Choosing the right materials is critical when packaging advanced chips that have extremely low tolerance for microscopic deformation. T-glass is used as a reinforcement layer under or around the chip. These reinforcement layers help prevent the package from deforming when the processor heats up to near the boiling point of water.
Since copper clad laminates (CCL) are mainly made of copper foil and non-conductive composite materials (such as T-glass, epoxy resin) by hot pressing, T-glass can be said to be the key raw material of CCL. At the same time, CCL is the core base material of PCB, responsible for constructing the skeleton of PCB to form a conductive layer, allowing various electronic components on the circuit board to be connected to each other and energized.
Nittobo was founded in 1923 as a cotton and silk spinning company. It was a pioneer in the development of fiberglass, a technology that allows ultra-fine glass strands to be woven together like a fabric.
Industry insiders say that while the principles of fiberglass are well known, companies like Nittobo have their own formulas that combine specialized glass materials and methods of weaving fibers. In such a traditionally low-profit industry, only a few companies have continued to invest in the most advanced technology research and development.
At present, although Nittobo has announced plans to increase production capacity to three times the 2025 level by 2028, and will start a steady increase in production in the second half of this year. But for customers in urgent need of materials, progress is still slow.
Even Apple is anxious
Typically, consumer electronics manufacturers take a laissez-faire approach to raw material suppliers that are several steps away from the chips that end up in phones or computers. But people familiar with the T-glass supply chain revealed that the market tightening has prompted companies such as Apple to send more managers to Japan and negotiate directly with companies such as Nittobo to ensure material supply.
In its written reply, Nittobo expressed delight at its newfound status. "It is a positive development that electronics and semiconductor manufacturers are finally recognizing fiberglass cloth as a key material," the company said.
Performance data shows that in the last fiscal year, the company's operating profit hit a new high of approximately $104 million.
In fact, T-glass isn't the only example of how today's advanced computing relies on overlooked raw materials.--Ajinomoto, the Japanese food company best known for commercializing MSG, used its chemistry knowledge to create a specialized film that is used alongside T-glass as the bottom layer of the chip. NVIDIA's million-dollar server racks rely heavily on drawer slides from a Taiwanese furniture parts manufacturer.
Meanwhile, although Japanese companies control many upstream semiconductor materials, their historically cautious approach could slow their response to surging demand.
Nittobo mentioned that some customers had made optimistic forecasts in the past, but then suddenly withdrew them after the market fell. "Demand for artificial intelligence is growing at a meteoric pace, but we do not expect this growth rate to continue," the company said.