Japanese semiconductor materials manufacturer Sumitomo Bakelite has announced plans to expand its production capacity for advanced semiconductor packaging materials at facilities in China and Singapore, reflecting rising demand fueled by the growth of artificial intelligence (AI) technologies.
The Tokyo-based company said on Friday it will add new production lines for mould underfill (MUF) materials and compression-moulding granules at its Suzhou factory in Jiangsu province and its Singapore plant. While the firm did not disclose the financial details of the investment, it stated the expansion is expected to approximately double its MUF materials output and triple its production of compression-moulding granules compared to current levels.
The additions in Suzhou will be incorporated into an existing factory that was expanded in 2024, with operations slated to begin in the fiscal year 2030 (starting April 2029). In Singapore, the new production lines are planned to become operational by the end of the 2028 fiscal year.
Sumitomo Bakelite highlighted the rapidly growing demand for advanced semiconductor packaging driven by applications such as generative AI and communications satellites, especially in China and Southeast Asia. These markets require packaging technologies capable of supporting larger, thinner, and more densely integrated chips. MUF materials serve to fill microscopic gaps in semiconductor packaging, enhancing reliability and manufacturing efficiency, while compression-moulding granules enable the production of larger chip packages with reduced warpage to improve durability.
Industry data from Semiconductor Equipment and Materials International (Semi) indicated that global revenue for semiconductor packaging materials rose 9.3 percent to US$27.4 billion in 2025, with China representing the world’s second-largest market for these materials at US$15.6 billion. Chinese semiconductor manufacturers are also increasing investments in advanced packaging technologies. For example, Shanghai-listed Biwin Storage recently announced a 4.5 billion yuan investment in wafer-level advanced packaging and testing, including technologies such as 2.5D packaging.
This latest announcement from Sumitomo Bakelite comes less than four months after the company revealed an earlier expansion plan for its Suzhou facility, aimed at increasing its semiconductor encapsulation materials capacity in China by about 30 percent, with production expected to start around December 2028.
Sumitomo Bakelite has been producing semiconductor packaging materials in China since 1997 and is considered one of the world’s largest suppliers in this sector, holding an estimated global market share of approximately 40 percent.
The current expansion also aligns with the company’s strategy to fortify its presence in the advanced packaging market through acquisitions. In January, Sumitomo Bakelite agreed to acquire part of Kyocera’s chemical materials business for around 30 billion yen (US$220 million), including operations focused on semiconductor encapsulation materials and bonding pastes. This transaction, expected to close by the end of October 2026, covers additional chemical materials manufacturing in Wuxi, another hub in Jiangsu province, and will enhance the company’s production capacity and supply network across Japan, China, and Southeast Asia.