Toppan aims to bolster business continuity by setting up production in Singapore, away from its Japanese operations. (Toppan)

Toppan Holdings plans to build a semiconductor package substrate plant in Singapore and begin operations at the end of 2026, joining several other Japanese substrate makers in boosting capital investment amid booming demand tied to artificial intelligence.

The Japanese printing and materials group did not disclose the investment in the plant, but the figure is estimated at 50 billion yen ($338 million).

The factory is anticipated to create 200 jobs. Its capacity likely will be increased in line with demand, with total investments expected to surpass 100 billion yen in the future.

Though Toppan will bear the initial brunt of investment, any capacity expansion later could receive financial support from the company's main customer, U.S. semiconductor giant Broadcom.

Toppan currently produces package substrates only at its plant in central Japan's Niigata prefecture. The planned Singapore factory will be near many back-end processing contractors that handle semiconductor assembly and testing in Malaysia and Taiwan.

Toppan looks to boost its overall substrate production capacity 150% by fiscal 2027 compared with fiscal 2022 by expanding the Niigata facility and opening new facilities.

Package substrates are the components on which integrated circuit chips are placed and connected to printed circuit boards. Toppan is boosting production of substrates that can handle increased circuitry density.

The miniaturization of circuit line widths in order to improve chip performance is nearing its limit, and chips are becoming larger. Toppan will support the evolving industry with larger and multilayered package substrates, which will be used in semiconductors for communications, AI and other fields.

The chip substrate market is projected to reach $29 billion by 2028, up 90% from 2022, French research firm Yole Intelligence reports.

Among other Japanese package substrate manufacturers, Ibiden plans to start operations at a new factory in central Japan's Gifu prefecture in fiscal 2025, with an estimated investment of over 100 billion yen.

Shinko Electric Industries is investing 140 billion yen to boost production at existing factories and build a new plant in Nagano prefecture, also in central Japan, scheduled to start operating in October 2024.

Japanese companies are particularly strong in FC-BGA -- or flip chip ball grid array -- a high-performance type of package substrate, in which they have a 40% share of global production capacity, Techno Systems Research reports.

Looking at the share of FC-BGA substrates by company, Ibiden leads with 17%, followed by Shinko Electric with 12%, Kyocera with 4% and Toppan with 3%. Taiwanese companies also hold a 40% share, with Unimicron at 19% and Nan Ya Printed Circuit Board at 12% leading the way.

In selecting the site for the plant and hiring personnel, Toppan received support from Singapore's government and Broadcom, whose headquarters were in the city-state until 2018.

Building the Singapore plant also bolsters Toppan's business continuity plan.

In 2023, it acquired an Ishikawa prefecture facility belonging to display technology company JOLED, which had filed for bankruptcy protection, as a production base for package substrates. Because Ishikawa is in the same region as Niigata, the company saw the need to secure another production site elsewhere.

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