Supply Chain Comes under Even More Pressure Advanced Packaging: Substrates Are Becoming a Bottleneck for High-End Chips

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It is not only leading-edge wafers and memory that are currently limiting the expansion of high-performance computing hardware. Broadcom CEO Hock Tan also cites substrates as a critical bottleneck. Additional substrate capacity is therefore expected to be available in Singapore starting in fiscal year 2027.

The sharp rise in demand for high-performance processors driven by the AI boom is also putting increasing pressure on downstream semiconductor manufacturing. In addition to wafer capacity and memory, the focus is shifting to components that have received significantly less attention to date, such as package substrates. The tech company Broadcom foresees a potential bottleneck in the coming fiscal year, particularly with regard to substrates, and is therefore working with a partner to expand manufacturing capacity in Singapore.

CEO Hock Tan made this statement during the earnings call for the third quarter of 2026 (via Investing). In response to an analyst’s question about the supply of substrates and interposers, Tan said that Broadcom would begin using its substrate manufacturing facility in Singapore starting in fiscal year 2027.

Substrates Connect the Chip to the Circuit Board

In highly integrated semiconductors, package substrates play a crucial role between the silicon and the printed circuit board. In FC-BGA packages, multilayer structures with high wiring density establish the electrical connections between one or more dies and the system board. As chip sizes increase, I/O counts rise, and multi-die packages become more complex, the demands placed on these substrates also increase. Large substrate areas and a high number of interconnect layers are required, for example, for high-performance network processors and accelerators.

Broadcom has been involved in expanding related production capacity in Singapore for several years. Advanced Substrate Technologies (AST), a subsidiary of Toppan, began construction there in 2024 on a factory for high-end FC-BGA substrates. Production is scheduled to begin by the end of 2026. Broadcom is supporting the project and, according to Toppan, is its largest customer for FC-BGA substrates.

The Pressure on Capacity Doesn't Stop at the Substrate

According to Broadcom, large data center projects must take into account more than just land, power supply, and buildings; leading-edge silicon, memory, and substrates also determine when additional computing capacity will actually become available. Accordingly, capacity expansion is not limited to substrates. The company is also expanding its manufacturing of optical components. According to Charlie Kawwas, president of the Semiconductor Solutions Group, capacity for EML, continuous-wave, and VCSEL lasers, as well as for indium phosphide components, will more than triple in the U.S. and Singapore compared to last year. The investments are expected to continue over the next two years. Here, too, demand for lasers currently exceeds available supply, Tan explained. The components are needed, among other things, for optical interconnects in large data centers.

Broadcom’s statements are relevant even beyond the current AI boom. As semiconductor packages become larger and more complex, their availability depends not only on sufficient wafer capacity. Substrates and packaging processes must also scale accordingly. At the same time, the expansion in optical components shows that capacity pressures are now affecting other parts of the hardware supply chain. The fact that Broadcom is securing additional substrate capacity demonstrates the significance this comparatively less visible part of the semiconductor supply chain has now attained.