As the surge in demand for high-performance computing (HPC) chips driven by artificial intelligence (AI) continues, the semiconductor industry has reported that Japanese chemical giant Asahi Kasei is planning to cut off supplies of its advanced packaging key material, photosensitive polyimide (PSPI), to some customers due to capacity constraints.
The market fears that both TSMC and ASE could simultaneously face supply bottlenecks, potentially triggering a global AI supply chain disruption crisis.
Industry analysts suggest that Asahi Kasei's adjustment of its material supply strategy is actually aimed at prioritizing shipments to major advanced packaging clients, which explains the temporary suspension of deliveries to smaller customers.
Limited impact on TSMC and ASE
As the world leader in wafer foundry services, TSMC's CoWoS technology remains central to the current AI chip market, positioning it to secure priority supply rights from Asahi Kasei with relatively limited impact from any supply cuts.
ASE, which has actively expanded into advanced packaging in recent years, faces intense competition globally not only from other foundries and outsourced semiconductor assembly and test (OSAT) providers but also from integrated device manufacturers (IDMs) aggressively entering the space. This competitive pressure may disrupt ASE's long-term expansion plans, affecting order intake and market competitiveness.
However, industry insiders point out that ASE's close collaboration with TSMC in advanced packaging will help it avoid short-term material supply disruptions.
Therefore, rumors about an imminent AI supply chain break triggered by advanced packaging material shortages are unlikely to affect these two companies in the near term but could impact other small- and medium-sized semiconductor firms.
Notably, both TSMC and ASE continue to expand their advanced packaging capacities, and the overall market demand for PSPI materials is expected to grow steadily and even accelerate exponentially over the long term.
If the PSPI supply bottleneck persists, it could further slow the industrial development of generative AI, edge AI devices, and AI robotics.
Asahi Kasei confirms demand far exceeds expectations
According to a press release from Asahi Kasei, demand for its Pimel PSPI products in the advanced packaging market is growing much faster than expected. Its Shizuoka plant began production at the end of 2024 and is expected to gradually increase output to ensure stable supply. The company is actively evaluating future capacity expansion plans and denies that the current supply suspension is due to production quality issues.
Insulating PSPI is a critical consumable in advanced packaging processes and an indispensable material for AI chips. Combining photosensitivity and insulation properties, it is widely used as a surface protection layer, bump passivation layer, and redistribution layer (RDL) insulation in wafer-level packaging (WLP). It simplifies multilayer wiring processes, and currently, no alternative materials exist in the market.
Due to the high technical barriers, the PSPI market structure is highly concentrated. Besides Asahi Kasei, the main suppliers include HD MicroSystems—a US-Japan joint venture—as well as Toray and Fujifilm. These four companies collectively hold more than 90% market share, making it difficult for Taiwanese and Chinese manufacturers to enter.
A Taiwanese materials supplier noted that Asahi Kasei holds a dominant oligopoly position in the PSPI market for advanced packaging. New entrants face extremely high certification thresholds to join customer supply chains, and passing certifications quickly is challenging. Thus, immediate opportunities for Taiwanese firms to take over Asahi Kasei's orders are limited.
Industry experts believe that facing PSPI supply constraints caused by capacity bottlenecks, major advanced packaging players will prioritize inventory management or adjust production schedules in the short term to mitigate impacts. They will also accelerate efforts to seek alternative sources from suppliers capable of stable delivery.
For example, TSMC and ASE might gradually increase procurement proportions from the other three major suppliers, reducing reliance on Asahi Kasei through small-scale order transfers.
Article translated by Charlene Chen and edited by Jack Wu
