Supply falls short of demand but price hikes are refused; behind Nitto Boseki's "market share defense battle" is a big bet on the long-term prosperity of AI fiberglass.

Supply falls short of demand but price hikes are refused; behind Nitto Boseki's "market share defense battle" is a big bet on the long-term prosperity of AI fiberglass.

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Facing a surge in demand for high-end glass fiber materials triggered by the wave of AI servers, global key supplier Nitto Boseki has chosen to forego short-term price hikes and instead secure capacity expansion and consolidate market share through stable pricing. The company has also significantly raised its mid-term capital expenditure budget by 50%, betting on long-term prosperity in the AI glass fiber sector.

Senior management at Nitto Boseki made it clear that there are currently no plans to raise prices for low thermal expansion coefficient (Low-CTE) glass fiber cloth (T-glass), nor will there be adjustments to the price of low dielectric glass. The company will maintain the prices set at the beginning of this fiscal year and continue supplying customers. Their top priority now is expanding capacity and stabilizing market share, and they stressed that as long as their products remain competitive and demand strong, they will not hesitate to proceed with capacity expansion investments.

This strategy comes with a simultaneous large-scale capital commitment. Nitto Boseki has raised its capital expenditure budget for the mid-term business plan from FY2024 to FY2027 from ¥80 billion to ¥120 billion, an increase of 50%. It also plans to add glass fiber cloth production lines in Fukushima, Japan and new glass furnace equipment in Taiwan, China. This statement indicates that under the continued tight supply of T-glass, short-term price pressure will ease for downstream IC substrate and printed circuit board (PCB) manufacturers.

T-glass, a core material for IC substrates and PCBs, is valued for its low thermal expansion properties, which effectively prevent deformation in advanced packaging under high temperature conditions and are key for maintaining the stability of high-end computing. As demand for AI servers and edge devices continues to exceed expectations, the supply gap for this material is expanding rapidly, making Nitto Boseki’s pricing and expansion strategies pivotal throughout the AI hardware supply chain.

AI Server and Edge Device Demand Exceeds Expectations

According to Japanese media, Nitto Boseki originally focused its expansion plans on low dielectric glass fiber, but as actual demand for AI servers and smartphones and other edge devices far surpassed expectations, the supply gap for Low-CTE T-glass widened dramatically, prompting the company to shift strategic focus and accelerate expansion of T-glass production.

The company pointed out that T-glass demand is rapidly expanding in both thick and thin categories: demand for “thick cloth” used in semiconductor packaging substrates for AI servers continues to rise, while growth for “thin cloth” used in smartphones and other edge devices is even faster than expected. Faced with simultaneous supply shortages at both ends, consensus within the company is that further capital upgrades are necessary to meet strong demand from both thick and thin cloth customers.

Rejecting Price Hikes, Prioritizing Market Share

Regarding widespread attention to price trends, Nitto Boseki management clearly stated that there are no plans to further adjust prices for T-glass and low dielectric glass and will continue supplying according to the prices set at the beginning of this fiscal year.

This approach runs counter to the typical logic of price hikes during supply shortages. The company’s strategy: during the phase of deep AI hardware supply chain expansion, locking in customers and solidifying market leadership brings greater long-term returns than short-term price increases. The company reiterated that as long as the products remain competitive and market demand persists, capacity expansion investments will continue.

To support this strategy, Nitto Boseki has raised its mid-term capital expenditure budget for FY2024 to FY2027 from ¥80 billion to ¥120 billion, an increase of 50%.

For capacity layout, the company plans to add glass fiber cloth production lines in Fukushima, Japan, and new glass furnace equipment in Taiwan, China, forming a dual expansion track across Japan and Taiwan. According to the company, this is intended to meet the needs of both thick and thin cloth customers and further consolidate market leadership in high-end glass fiber materials through capacity advantages.

Strategic Value of T-glass as a Material

Glass fiber cloth is a critical component in IC substrates and PCBs, serving as the foundational material for chip reinforcement layers in electronic devices. With stringent requirements for micro-scale deformation in advanced chip packaging, T-glass—thanks to its low thermal expansion properties—can effectively suppress packaging deformation and is an irreplaceable core material for ensuring stable operation in high-end computing.

Nitto Boseki is a flagship manufacturer with control over global supply of high-end, low thermal expansion glass fiber. As AI infrastructure construction accelerates, the structural growth trend in T-glass demand has become increasingly established. Nitto Boseki’s strategy to exchange market share for short-term price gains is essentially a proactive bet on the continued long-term prosperity of this sector.

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