Equity X-Ray: In-Depth Research #30b

In this new deep research, we’re breaking the topic into 2–3 parts since it’s pretty complex and we want to keep it as digestible as possible.

It’s also something we had to spend time researching ourselves, as it’s not an area where we have deep expertise. Like other topics we’ve covered in recent months, such as the space economy (Research #26) or the growing strain on electrical infrastructure from the rise of data centers (Research #27), it starts as a broad idea but can uncover new investable themes.

These themes can help identify publicly traded players positioned to benefit from the trend. In fact, in the second part of the analysis, which we’re aiming to release as early as next week, we’ll highlight at least one listed company that could be a strong opportunity if you believe this theme will play a meaningful role in the future of AI.

First part below, Equity X-Ray: In-Depth Research #30a.

THE MEGATREND, THE CONNECTIONS, AND THE MONEY GAME

Now that you understand what glass substrates are, let’s talk about why this matters as an investment theme, and why the second and third-order effects of this transition are far larger than most people realize.

The Fog of Direction

Before we get excited, let’s be honest about something. Unlike the transition from copper to optical interconnects, where the direction was clear and the only question was timing, the substrate battlefield is genuinely uncertain.

Multiple futures are competing simultaneously.

This is not a story about a guaranteed winner. It’s a story about a massive structural shift where the spoils will go to whoever can navigate the fog.

Three camps are fighting for the future of chip packaging.

The glass camp believes glass substrates will replace organic substrates as the foundation of AI chips. Intel has invested over a billion dollars and holds nearly half of all patents in this space. Samsung has assembled the most ambitious vertical integration of any player, with its SEMCO subsidiary handling glass-core substrates, Samsung Display contributing large-area glass-processing expertise, and Samsung Foundry covering packaging integration. Absolics, a subsidiary of SKC, built a $600 million factory in Georgia and secured $175 million in US government support through the CHIPS Act.

The organic camp argues that the old physics isn’t dead yet. Ajinomoto’s ABF film commands over 95% of the global market for organic substrate insulation material. Current mainstream products sit at a line/space of around 10 micrometers, but leading-edge processes are already hitting 5 to 7 micrometers. The industry has officially entered the sub-5-micrometer race, with 3/3-micrometer demonstrations already on the table. There’s still meaningful headroom before any physical wall.

And then there’s TSMC, which sits above both camps and plays all sides simultaneously!