Japanese fiberglass cloth giant Nitto Boseki (Nittobo) announced plans to invest JPY15 billion(US$101.87 million) to expand its production facilities to meet surging demand from AI server customers. The group will build a new factory equipped with advanced fiberglass fabric manufacturing capabilities. Production is expected to begin gradually, starting from the fourth quarter of fiscal year 2026 at the earliest, which ends March 2027.
Nittobo said that if the new factory and capacity are fully dedicated to producing low coefficient of thermal expansion (low CTE) glass cloth known as T-Glass, output could reach approximately three times the current level.
Fukushima facility takes shape
Nittobo's new Fukushima plant is scheduled to break ground in October 2025 and complete construction by December 2026. The site will cover an area of 67,500 square meters, with the factory itself occupying 17,200 square meters. The facility will focus on low CTE glass cloth used in advanced logic ICs.
Government backing strengthens strategic expansion
Nittobo stated that the expansion of T-Glass capacity used for advanced logic IC semiconductor packaging substrates has been approved by Japan's Minister of Economy, Trade, and Industry under the Economic Security Promotion Act as part of the Supply Chain Enhancement Plan. The company may receive a subsidy of up to JPY2.4 billion.
Additionally, capital expenditure funding support for the new facility has been approved through Fukushima Prefecture's industrial promotion and investment attraction subsidy program. The company believes that qualifying for two separate subsidies highlights its contribution to Japan's national economic security and underscores the important role it plays in revitalizing the local economy.
AI boom drives unprecedented demand
Nittobo pointed out that the rapid development and widespread adoption of generative AI technology in recent years has driven simultaneous growth in AI server performance and market size. Since the second half of 2023, the group's low dielectric constant (low Dk) glass cloth has been adopted in switch motherboards for high-speed chip-to-chip communications inside AI servers, causing a sharp increase in demand.
T-Glass solves critical packaging challenges
In 2024, with the widespread adoption of advanced packaging technologies for high-density integration of multiple chips in AI server semiconductors, the industry entered a large-scale application phase. While this technology significantly enhances semiconductor packaging performance, it also requires larger and higher-layer count packaging substrates. Consequently, it faces critical process challenges such as substrate warpage caused by uneven coefficients of thermal expansion.
T-Glass cloth produced by Nittobo has already gained recognition from AI customers as the most efficient solution currently available in the market. This has led to substantial increases in usage by packaging substrate manufacturers. Demand for specialized glass formulations is expected to grow significantly alongside the expanding AI server market.
Global niche strategy takes root
Since fiscal year 2017, Nittobo has incorporated high-value-added products into its core business strategy. Through building a special glass factory in Taiwan, adding new furnaces, and converting general-purpose glass furnaces into specialty glass furnaces, the company has actively expanded its fiberglass cloth capacity. These efforts aim to establish a globally leading niche business in the field of electronic materials.
Investment pipeline remains robust
Nittobo previously announced in its medium-term management plan for fiscal year 2024 that it would invest JPY80 billion in capital expenditure over the next four years. However, recognizing that such investments may not satisfy all market demands, the company may continue making necessary and timely additional investments after carefully evaluating medium-term to long-term market trends.
Article translated by Eifeh Strom and edited by Jerry Chen
