Nvidia CEO Jensen Huang says, "I love constraints," praising the ongoing shortages caused by AI
China moves into manufacturing disruptive new semiconductor glass substrates as processor packaging competition intensifies
Bank of America estimates that Nittobo’s electronic materials segment will see sales nearly double from ¥40.9 billion ($266 million) in 2025 to ¥87.7 billion by March 2028, with operating margins approaching 48%. “Demand for T-glass cloth seems likely to grow more than originally expected,” said Takashi Enomoto, research analyst at Bank of America. “The focus has been on growth in demand for thick T-glass for use in GPU and CPU semi packages, but now ultra-thin T-glass demand is likely to rise on a shift from E-glass to ultra-thin T-glass in leading-edge devices.”
With that in mind, the scramble for allocation has begun in earnest. Hachemi says that Nvidia reaching out directly to an upstream material supplier like Nittobo is unprecedented. “For the first time, we are seeing Nvidia, the end customer, reaching out to the upstream material suppliers to secure the capacity and make sure they will get it,” he explained, saying it was the first time he’d seen this happen in that particular area of the supply chain. The worry is that once Nvidia locks down its share, rival chip buyers will be left fighting over whatever remains.
Nittobo is investing heavily to try and ensure there’s plenty of demand for those who need it. Beyond the capacity increase at its Fukushima plant, Nittobo is doubling capacity of the raw yarn at its Taiwan plant and importing yarn back to Japan for cloth manufacturing. It has also struck a collaboration deal with Nanya Plastics to outsource some weaving.
That deal is an indication of how tight the market is: Nittobo is partnering with one of its biggest competitors to ease the bottleneck. By 2027, roughly 20% of Nittobo’s glass cloth is expected to be woven by Nanya, the company disclosed in a recent letter to shareholders .
Despite those efforts, relief from the tight market doesn’t look likely any time soon. Hachemi estimates the supply-demand imbalance won’t be resolved until the second half of 2027 at the earliest. And he warns that the same pattern could repeat with other critical materials in the IC substrate stack, pinpointing copper foil layers, solder mask, and copper-clad laminates as potential chokepoints.
“If you want to secure all the supply chain capacity regarding IC substrate, you need to look also for other important materials,” he said.
Just as with other physical elements of AI infrastructure, the T-glass shortage isn’t just affecting GPU packages. JPMorgan noted in a recent research note that demand for ultra-thin T-glass — which is used in smartphone memory and system-in-package applications — is also rising sharply, driven by a shift away from conventional E-glass in leading-edge devices. In recent years, Nittobo has prioritized thick T-glass expansion for the AI market, but now faces growing demand for ultra-thin variants as well.
Given the dominance of Nittobo, other companies have been reticent to try and move into the space. But new entrants are starting to try and spin up their own T-glass supplies, given such high demand. Taiwan Glass, Grace Fabric, and several Chinese manufacturers have been trying to produce comparable materials, but yields remain low enough to deter meaningful market entry. Nittobo’s advantage remains key because it has both proprietary glass composition and its direct-melting production method, a more cost-effective but technically demanding process that competitors have struggled to replicate.
Whether that changes by 2027 and the market begins to unlock, alongside Nittobo’s new capacity, is difficult to forecast. But even if it can, Hachemi has a warning for those thinking T-glass is the end of the problem. “A similar phenomena can happen to other materials, too,” he said.
As for Nittobo's customers, Nvidia's Jensen Huang has spoken on-record about enjoying the ongoing constraints: "I've got all the packaging, I've got all the systems, I've got all the connectors, I got all the cables. Everything from copper to multilayer ceramic capacitors, everything is secured." Huang said at a recent press conference , and T-Glass is just one crucial component in the ongoing AI build out.
Chris Stokel-Walker is a Tom's Hardware contributor who focuses on the tech sector and its impact on our daily lives\u2014online and offline.\u00a0He is the author of How AI Ate the World, published in 2024, as well as TikTok Boom, YouTubers, and The History of the Internet in Byte-Sized Chunks. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-18/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Chris Stokel-Walker Freelance Contributor Chris Stokel-Walker is a Tom's Hardware contributor who focuses on the tech sector and its impact on our daily lives—online and offline. He is the author of How AI Ate the World, published in 2024, as well as TikTok Boom, YouTubers, and The History of the Internet in Byte-Sized Chunks.
Key considerations
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Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/shortages-of-crucial-chip-packaging-material-threatens-ai-accelerator-supply-chains-nittobos-fukushima-plant-is-tripling-capacity-but-itll-take-years-before-market#main
- https://www.tomshardware.com
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