The Board Is the Bottleneck: AI’s Next Supply Crunch

Shortages of substrates and circuit boards could delay AI server deliveries even as chip production expands. Taiwan suppliers are warning that these components face shortages extending into 2027, as larger AI systems consume more materials and manufacturing capacity. Expanding CoWoS capacity will not be enough to meet AI hardware demand if substrate and circuit-board production cannot keep pace.

At October’s TPCA Show, Unimicron Chairman Shan-Chieh Chien warned that some critical materials could face a roughly 20% supply shortfall in 2027. Certain production machines now require up to 30 months for delivery. Those delivery times mean new factory space may be ready long before the equipment needed to begin production arrives.

CoWoS brings processors and high-bandwidth memory together within an advanced package. Substrates provide the connections between that assembly and the circuit board beneath it. Server PCBs then connect packaged chips, power circuitry, and other components. Each stage must expand together: additional packaging capacity cannot compensate for missing substrates or unfinished boards.

The demand problem goes beyond rising server shipments. Larger AI accelerator packages require larger substrates, while additional wiring layers increase manufacturing work. More demanding designs require repeated processing, finer connections, and tighter defect control. A factory can therefore become fully occupied without producing proportionately more finished units.

Simultaneous expansion by Unimicron, Kinsus, Nan Ya PCB, and overseas competitors is transferring pressure onto equipment suppliers. Some material shortages are easing as manufacturers approve additional suppliers, but long equipment delivery times still limit production expansion.

High-layer PCBs face a related challenge. Faster connections require materials that preserve signal quality, while thicker, denser boards make precision drilling more difficult. Suppliers must increase throughput while maintaining accuracy across increasingly complex structures.

Customers are responding by strengthening supplier relationships. In September, Gold Circuit approved a private placement naming Amazon as the buyer. Amazon’s investment in Gold Circuit highlights how securing circuit-board supply has become a strategic priority for cloud operators.

For Taiwan’s substrate and PCB manufacturers, meeting customers’ delivery schedules increasingly depends on securing materials and production equipment early. For server manufacturers and cloud operators, shortages could delay production, installation, and revenue generation. Larger accelerator packages, additional board layers, and faster connections could make substrates and high-layer PCBs major bottlenecks in 2027. Companies that secure these components alongside chips and advanced packaging capacity will be better placed to deliver complete systems on time.