Panel Giants Crossing Boundaries into Chip Packaging: A Gamble with Glass and a Quest for Breakthrough
Summary of Key Points
In simple terms, Chinese manufacturers of mobile and television screens—companies like BOE, TCL, and Shenzhen Tianma—have noticed a slowdown in the growth of their screen business and have turned their attention to the new field of chip packaging. They have realized that future high-end chips (especially AI chips) will no longer use traditional organic materials as their base layers but will instead rely on glass for packaging. Glass is flatter, thinner, and better at heat dissipation, allowing for more complex circuit designs.
Although this new market is still very small (estimated at only a few hundred million dollars in 2026), its potential is enormous (potentially reaching several billion dollars by 2030). Chinese panel manufacturers hope to leverage their experience in handling large sheets of glass to enter this industry. However, the transition is not easy, as the manufacturing processes, customer certifications, and quality requirements for glass used in screens and chip packaging are vastly different. Currently, Chinese companies are still in the early stages of providing samples for testing, which is 1-2 years behind their overseas competitors. Success will depend on which company can improve its yield rates and secure customer partnerships.
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Detailed Analysis
1. Why the sudden focus on glass? Because AI chips are too large for traditional materials
Chip packaging can be thought of as dressing the chip in a protective layer or laying a foundation for it. For decades, organic materials (such as resin and plastic-based ABF substrates) have been used for this purpose. However, modern AI chips, like those from NVIDIA, are becoming larger and have more intricate circuits, posing high demands on the packaging material:
- Flatness: The circuits are as thin as hair, and even slight imperfections in the base layer can cause them to fail.
- Stability: Chips generate a lot of heat, and the packaging must not deform under these conditions; otherwise, the chip will be damaged.
- Thinness: Thinner packaging is essential for better heat dissipation and reduced size.
Traditional organic materials have reached their limits in meeting these requirements. Glass, on the other hand, has natural advantages: it is highly flat, has a low coefficient of thermal expansion (does not deform easily), can be made very thin, and minimizes signal transmission losses. Therefore, chip giants like TSMC, Intel, and Samsung are promoting glass-based packaging. This is similar to replacing traditional rammed-earth foundations with reinforced concrete for skyscrapers.
2. Why do Chinese panel manufacturers think they can succeed? Because they are experts in working with glass
You might wonder: How can companies that make screens also make chip packaging? Isn’t the leap too big? In fact, the underlying principles of panel manufacturing and glass packaging are similar:
- Large-scale processing: Panel manufacturers handle large sheets of glass, which are also used in chip packaging (although smaller than screen glass, they are still much larger than traditional chip substrates). They have extensive experience in cutting, transporting, and cleaning such large sheets.
- Quality control: Panel manufacturers have strict quality management systems to minimize defects, which are also critical in chip packaging. This expertise can be directly applied.
- Cost efficiency: The panel industry benefits from economies of scale, and chip packaging will also require mass production to reduce costs. Chinese manufacturers are well-versed in this aspect.
3. The reality of the challenge: The gap between samples and mass production
Despite the logical appeal, there is a significant gap between being able to produce a sample and being able to produce it at a profit. A key example mentioned in the article is SKC’s Absolics, which has established a factory in the United States but has faced delays in commercialization due to difficulties with yield rates. Glass-based packaging faces several challenges:
- TGV (Through-Glass Vias): Creating micrometer-sized holes in glass and filling them with copper while ensuring the walls are smooth is much more difficult than with metal, as glass is brittle and prone to cracking.
- Multi-layer wiring: Modern AI chips require multiple layers of circuits that must be precisely aligned; even a slight misalignment can ruin the entire board.
- Reliability testing: Chips must operate stably at high temperatures for years, and it takes time to verify that the glass substrate will not crack under repeated thermal cycles.
Currently, Chinese manufacturers (BOE, TCL, Shenzhen Tianma) are mostly in the sample and pilot production stages:
- BOE: Has already started production and is producing samples at a faster pace.
- TCL CSOT: Plans to showcase samples in the second half of 2026, with key processes still under validation.
- Shenzhen Tianma: Still in the research and development phase.
Analyst Zhou Hua notes that Chinese companies are 1-2 years behind leading overseas players like Intel and Samsung Electro-Mechanics. This gap is needed to improve yield rates and gain customer certifications. Without achieving these goals, even advanced technology will not lead to mass market success.
4. How large is the market? Small now, but potentially huge in the future
Many may question the feasibility of investing in such a small market. Here are the projections:
- 2026: The global market is estimated at 500-1 billion dollars, roughly equivalent to the annual revenue of a mid-sized listed company.
- 2027-2028: If TSMC and Samsung scale up their projects, the market could grow to 2-5 billion dollars.
- 2030: If glass-based packaging accounts for 20%-30% of AI chip packaging, the market could exceed 10 billion dollars.
10 billion dollars is a significant figure, comparable to the annual revenue of a leading chip packaging company like ASE Technology. For giants like BOE and TCL with market values in the tens of billions, this represents a potential second growth driver. Moreover, AI chips are the core of future technological advancements, and the demand for chip packaging will continue to grow as the demand for computing power increases.
5. What are the risks? Don’t get too excited; there are significant hurdles
Despite the promising prospects, Chinese panel manufacturers face three major challenges:
1. Technological dependency: The standards for glass-based packaging are not yet established. If major customers like NVIDIA or Intel change their technology requirements, manufacturers may need to invest in new equipment and rebuild their production lines.
2. Long customer certification processes and slow revenue generation: Semiconductor customers are very selective, and the certification process can take 1-2 years. During this period, manufacturers must continue to invest without generating revenue, which can be a financial strain. Additionally, semiconductor customers are highly loyal and difficult to replace.
3. Supply chain and geopolitical risks: The production of key materials for glass-based packaging is dominated by European, American, and Japanese companies like Corning and Schott. Geopolitical issues or export restrictions could disrupt production.
Implications for All Stakeholders
- For investors: Don’t expect immediate profits from glass-based packaging. This is a long-term investment with a 3-5-year horizon. Focus on companies with the highest sample yield rates, those that have obtained certifications from leading chip manufacturers, and those with the earliest pilot production lines.
- For industry observers: This is a reflection of China’s manufacturing transformation from large-scale production to high-value-added industries. If successful, it could challenge the dominance of overseas companies in high-end packaging; otherwise, it highlights the importance of core technologies.
- For consumers: The chips in your future AI-powered devices may use glass-based packaging, resulting in faster, cooler, and more durable devices. Chinese panel manufacturers’ efforts in this area are quietly changing the underlying technology of these products.