Samsung Electro-Mechanics and Nvidia announce joint investment in AI chip substrate lines

What the 21 October agreement covers

Samsung Electro-Mechanics and Nvidia said the dedicated lines will make ABF package substrates for Nvidia's compute chipsets and for high-speed networking switches used in data centres. Deliveries are scheduled to begin in 2026. The Korean company expects volumes supplied to Nvidia to grow at a double-digit annual rate over several years, and by 2028 Nvidia-related production is projected to account for a significant portion of its total annual package substrate capacity.

Nvidia said agreements with Samsung Electro-Mechanics, Japan's Ibiden and Taiwan's Unimicron would help increase substrate production capacity for its products by 2.5 times over the next three years. The target applies to the broader supply plan. Neither company disclosed the value of Nvidia's capital contribution.

Duck-Hyun Chang, president and CEO of Samsung Electro-Mechanics, said: "It is a great honor to join NVIDIA, a global leader driving AI innovation, as a key infrastructure partner." He said the company would combine its FC-BGA manufacturing with its MLCC expertise to help Nvidia deliver AI platforms on time. Debora Shoquist, Nvidia's executive vice president of operations, said: "The pace of the AI infrastructure buildout requires us to expand manufacturing capacity on a global scale." She said the work broadens Nvidia's substrate partner network and adds capacity.

Tesla's reported 1.1 trillion won

Maeil Business Newspaper reported that Tesla plans to invest 1.1 trillion won ($830.2m) in the expansion, a sum included in Samsung Electro-Mechanics' 4.27 trillion won capital expenditure programme for FC-BGA capacity in South Korea. Under a five-year supply agreement running from 2029 to 2033, Tesla gets priority access to medium and long-term output. A dedicated line at Sejong will make substrates for AI chips used in Tesla's autonomous electric vehicles and its Optimus humanoid robot.

Construction is expected to conclude by the end of 2027. Equipment installation and test production are scheduled for the first half of 2028, followed by commercial output in the second half. Tesla deliveries are due to begin in 2029.

Reports on 26 October put the combined Tesla and Nvidia commitment at 3.7 trillion won, split into 1.1 trillion won from Tesla and 2.6 trillion won from Nvidia. Samsung Electro-Mechanics declined to confirm the Nvidia amount. Tech-insider.org noted that the reports do not show a complete public investment filing confirming each company's full amount. The two reported amounts would cover close to nine-tenths of the 4.27 trillion won programme.

Why substrates are a bottleneck

An FC-BGA substrate routes power and signals between the chip and the circuit board. AI packages that grow larger and denser push up layer counts, and holding the board flat under heat gets harder as area increases. BigGo Finance reported that server-grade FC-BGA is more than four times the area of standard PC substrates, with more than 20 layers, more than double the typical layer count. Nvidia's Blackwell used a substrate measuring 81.5mm by 74.8mm. Its next-generation Rubin Ultra measures 153mm by 77.5mm, roughly double the area.

Samsung Electro-Mechanics has run its FC-BGA lines at full capacity since the second half of this year. Most of that output is already allocated to specific customers.

The money and what is not confirmed

Sedaily reported that Samsung Electro-Mechanics' board approved 4.27 trillion won for package substrate expansion at Sejong on 28 September. The company added 2.51 trillion won in Vietnam, taking the total to 6.78 trillion won. The Sejong sum equals 43.6% of the 9.7973 trillion won in shareholders' equity recorded last year. Mass production at Sejong is set for September 2028. Its package solutions division reported second-quarter revenue of 771.6 billion won, up 37% from a year earlier.

The confirmed 21 October announcement covers joint investment and a multi-year supply agreement. It does not disclose Nvidia's contribution or purchase volumes. The larger 3.7 trillion won total remains industry-sourced, and Samsung Electro-Mechanics declined to confirm the Nvidia share.