Samsung Electro-Mechanics Secures Customer Backing for $5 Billion Substrate Expansion

Samsung Electro-Mechanics plans to spend 6.78 trillion won, or about $5 billion, expanding semiconductor package substrate capacity in South Korea and Vietnam as artificial intelligence infrastructure drives demand for higher-performance components.

The Korean electronic components maker said global technology customers are helping finance part of the capital expenditure for new AI-server substrate capacity at its Sejong plant. Those customers have also committed to medium- and long-term purchase volumes, giving the company greater visibility into demand as it undertakes its largest investment for a single product. Samsung Electro-Mechanics did not identify the customers or disclose their individual contributions.

Of the total investment, 4.27 trillion won will be directed to the Sejong facility in central South Korea. The project is scheduled to run through May 2028, with mass production on the new lines expected to begin in September 2028. The amount is equivalent to 43.6 percent of the company’s consolidated equity at the end of 2025, highlighting the scale of its commitment to the market.

A further 2.51 trillion won will be invested through the company’s Vietnamese subsidiary to expand package substrate production. That project is scheduled for completion by the end of April 2028. Together, the two projects will broaden Samsung Electro-Mechanics’ manufacturing footprint for components used in advanced computing systems.

The expansion centers on flip chip ball grid array substrates, known as FC-BGAs. These components connect processors such as AI accelerators, graphics processing units and central processing units to mainboards, carrying electrical signals and supplying power. As AI chips become larger and more complex, their substrates require denser wiring, more layers and stronger power-handling capabilities.

Demand has already been pressing against Samsung Electro-Mechanics’ available capacity. Chief Executive Chang Duck-hyun said in March that customer demand for server and data-center FC-BGAs was more than 50 percent above the company’s production capacity.

The Sejong expansion also advances a broader plan announced in July to invest about 8 trillion won at the site through 2040. The company has separately disclosed 3.32 trillion won in long-term contracts since May for silicon capacitors and multilayer ceramic capacitors used in AI servers, showing that customers are seeking to secure supplies across several critical component categories.

Customer funding and purchase commitments reduce some of the demand risk attached to the large buildout. They also underscore how competition for specialized substrates and capacitors is intensifying as major technology companies increase spending on AI data centers.