Advanced packaging welcomes a critical change: Goldman Sachs is optimistic about the leading glass fabric company, and Ming-Chi Kuo strongly supports Taiwan Semiconductor
Goldman Sachs upgraded the rating of Japan's Nitto Denko to "Buy," but remains cautious about the progress of TSMC's Glass Core Substrate (GCS). Renowned analyst Ming-Chi Kuo believes there is no substantial conflict between the two viewpoints and emphasizes the critical role of GCS in advanced packaging, as well as the collaboration progress between TSMC, Ibiden, and Innolux. The market expects large-scale commercial use of GCS to wait until after 2030, while ABF substrates still dominate
The Zhitong Finance APP noted that Goldman Sachs holds a cautious attitude towards the progress of TSMC's (TSM.US) Glass Core Substrate (GCS), while upgrading the rating of Japanese glass fiber fabric manufacturer Nittobo to "Buy."
However, well-known analyst Ming-Chi Kuo stated on the X platform on Thursday: "My understanding is that the other reasons cited by Goldman Sachs for this rating upgrade do not fundamentally conflict with the constructive view on the future development of GCS over the next few years."
Nittobo occupies more than half of the glass fiber fabric market, while TSMC is developing an alternative technology called GCS.
In June of this year, Kuo mentioned that at the 2026 JPCA exhibition in Japan, TSMC delivered a speech titled "Advanced Packaging Technology Essential for AI Evolution." One slide titled "Development of Glass Substrates for CoWoS" was leaked and attracted attention.
Kuo pointed out that TSMC has officially announced a collaboration with Ibiden and Innolux to develop GCS. "The structure is a three-layer design: the glass core is sandwiched between two layers of ABF laminate. This is precisely the 'oS' part in CoPoS. Secondly, the market underestimates the importance of the glass core substrate—this is a capability that TSMC must possess. In other words, in CoPoS, 'oS' is more critical than 'CoP.' This also explains why, during the testing phase, it is paired with existing CoW rather than combined with CoP."
The analyst mentioned at that time that the unit cost of the glass core substrate is several times that of the current ABF substrate. The price of the glass processed by Innolux is extremely high and is the most critical material. Kuo added that, apart from NVIDIA (NVDA.US), two other American clients have shown strong interest.
Goldman Sachs analysts, when upgrading Nittobo's rating on July 6, stated: "As for the alternative to the ABF core substrate—this is a key issue considering the potential replacement of T glass fabric—industry views from ABF substrate manufacturers like Fufide indicate that it is unlikely to be adopted before 2030. The industry also generally expects that TSMC's commercial-scale production of glass substrates can only begin after 2030. We believe that the existing glass fabric is likely to continue to be used at least until the Rubin Ultra generation of products. Meanwhile, due to the increase in substrate size and the increased core thickness (leading to more T glass content and additional layers to reduce warping), Nittobo should continue to benefit from this."
Kuo stated in a post on the X platform that based on past patterns, the likelihood of TSMC releasing significant updates on GCS/CoPoS during the upcoming July earnings call is relatively low.
The analyst believes that, especially considering that TSMC has shared key R&D results at the seminar in Japan and rarely mentioned supplier partners, the likelihood of Ibiden and Innolux disclosing significant progress on GCS during the August earnings call is also low
