China’s fast-growing AI model industry is hitting a bottleneck: advanced packaging substrate supply. Supply chain sources say ByteDance plans to spend 100 billion yuan annually by 2030 on chip packaging substrates. Huawei HiSilicon, Hygon, ByteDance, and leading OSAT firms are all competing for substrate capacity, while upstream suppliers race to expand.

Industry players call ByteDance’s target enormous. Even with expansion, current supply cannot meet orders of that scale. ByteDance is widening its substrate sourcing to support its custom AI chip program and align with China’s chip localization push.

Earlier reports said ByteDance discussed co-developing a custom AI chip with Broadcom and talked with Samsung on foundry and HBM supply. Estimated output was at least 100,000 units in 2026, potentially rising to 350,000. ByteDance said some reports contained inaccuracies; Samsung declined to comment.

Substrate makers say high-end packaging substrate shortages persist. Nvidia and other major clients have locked capacity through long-term agreements. As a new buyer, ByteDance needs large volume to win priority supply. Some suppliers now require prepayments of up to 50% of capacity value or joint expansion as a condition, preferring customers with large committed orders to avoid post-pandemic overcapacity risks.

Key substrate suppliers targeted by AI chip firms include Unimicron’s Qunce Technology, Nan Ya PCB’s Kunshan plant, and ZDT’s Xianyi Electronics.

ICgoodFind: AI compute demand is driving advanced packaging substrate shortages and fierce capacity competition. Securing substrate supply is now critical for custom AI chip rollout.