Advanced packaging materials

Why the concentration exists

Advanced packaging materials are the specialty chemical formulations that bond, cool, and protect stacked semiconductor dies inside high-density packages. The category includes thermal interface materials, capillary and non-conductive film underfills, die-attach films, liquid encapsulants, solder bumps and fluxes, build-up films, and reinforced glass cloth. Resonac's product line illustrates the breadth: capillary underfill with varying modulus, coefficient of thermal expansion, and glass-transition temperature, paired with die-attach films available in a wide range of thicknesses and thermal expansion properties. Ajinomoto's ABF film is the critical insulating film used in high-performance AI chip substrates, holding approximately 95% of the global market.[5][6][8][13]

Supply is concentrated because each formulation requires precision polymer chemistry, multi-year qualification with chip designers, and customer-specific recipes that are difficult to replicate. The qualification barrier is explicit in defense and aerospace programs, where the bottleneck is finding a qualified domestic packaging supplier with available capacity and a compliant process rather than securing a fab slot. Japan retains technical dominance in ABF substrates and related materials, with companies such as Ajinomoto, Resonac, Shin-Etsu, JSR, and Tokyo Ohka Kogyo continuing to occupy key points in the chain. Ajinomoto's near-monopoly in ABF film reflects decades of accumulated process know-how that competitors cannot shortcut.[1][13][16]

What the evidence shows

Who supplies it

On the packaging-services side, Taiwan Semiconductor Manufacturing holds over 50% of the high-end advanced packaging segment such as CoWoS for AI GPUs, and its global CoWoS capacity will account for about 70% of total market share in 2026. ASE plans to invest more than NT$108.3 billion (about $3.4 billion) in its Kaohsiung Renwu base, with additional outlays at the Nanzih K19A park and Innolux's Southern Science Park Fab5 plant. Intel does the majority of its final packaging in Vietnam, Malaysia and China, while TSMC sends 100% of chips to Taiwan for packaging, including those made at its Phoenix, Arizona fabrication plant.[9][10][11]

What it depends on, and what depends on it

The downstream output is the AI accelerator and high-performance compute package. CoWoS, invented by TSMC, is indispensable to producing AI processors such as Nvidia and AMD GPUs used in AI servers or data centers. As module size increases, cost and yield numbers do not make sense at wafer scale, which has prompted Applied Materials to call for a move to panel scale processing. Flip-chip packaging held a dominant position in the advanced semiconductor packaging market in 2023, capturing more than a 39.5% share.[4][12][17]

Where it sits in the stack

What would break it

Single-point-failure risks sit upstream of these materials. An Iranian strike on the Jubail petrochemical complex in Saudi Arabia in April 2026 halted production of high-purity polyphenylene ether resin, which accounts for 70% of the global supply. The strike caused 15-week component lead times and over 40% spikes in printed circuit board prices. With Ajinomoto at approximately 95% of global ABF supply, any disruption at its facilities would have system-wide consequences for advanced packaging.[13][14]

What to watch

Ajinomoto bought land for ¥1.2 billion for a new ABF plant expected to start operations in 2032, the clearest long-dated signal of capacity expansion. Nittobo's new supply from its Fukushima plant will not arrive until mid-2027, and Bank of America estimates that Nittobo's electronic materials segment sales will nearly double from ¥40.9 billion ($266 million) in 2025 to ¥87.7 billion by March 2028. Resonac is investing 15 billion yen to increase NCF and TIM capacity to 3.5 to 5 times current levels, with expanded facilities commencing operations step-by-step in and after 2024.[2][3][7][8]

Equipment and facility investments are also dated. ASML shipped its first i-line lithography system, the TWINSCAN XT:260, in late 2025 for 3D integration and advanced packaging applications. TSMC is building a new $2.9 billion advanced chip packaging facility in Miaoli, Taiwan, and will build two new advanced packaging facilities in Arizona as part of a $100 billion investment. Intel has had packaging customers since 2022, including Amazon and Cisco.[9][11][15][17]

Related nodes

Sources

1. heislersemiconductor.com · 2026-06-16T21:35:31
2. trendforce.com · 2026-05-08
3. tomshardware.com
4. semiengineering.com
5. resonac.com
6. resonac.com
7. eu.resonac.com · 2024-03-29
8. chemengonline.com · 2024-04-01
9. cnbc.com
10. eu.36kr.com · 2026-07-17
11. 247wallst.com · late 2025
12. market.us · 2024-2033
13. techtimes.com · May 2026
14. marctech2.com · April 2026
15. sourceability.com · Oct 12, 2023
16. cloudnews.tech
17. cnn.com · Jun 7, 2025