China’s CXMT makes ‘key progress’ on new chip structure: SCMP

Semiconductor materials firm Sumitomo Bakelite is set to boost its advanced chip packaging materials production in China and Singapore, a move timed with the rapid growth of artificial intelligence. The Japanese company announced plans to add production lines for mold underfill (MUF) materials and compression-moulding granules at facilities in Suzhou, Jiangsu province, and Singapore.

While the exact investment amount was not disclosed, the expansion is expected to roughly double the company's MUF production capacity and triple that of compression-moulding granules compared to current levels. The Suzhou production lines will be installed as part of a project completed in 2024, with operations starting in fiscal 2030.

Similarly, the Singapore facilities, which will be added to an existing site, are expected to commence operations by fiscal 2028's end. This strategic move highlights the increasing significance of advanced packaging materials in the semiconductor supply chain, driven by the surging demand for powerful chips with intricate packaging structures in AI applications and communications satellites.

In particular, MUF materials play a crucial role in filling microscopic gaps around semiconductor connections and sealing the package, enhancing reliability and manufacturing efficiency. Similarly, compression-moulding granules enable manufacturers to produce larger packages with minimal warpage, further boosting chip reliability.

Global semiconductor packaging material revenues rose 9.3% to $27.4 billion in 2025, according to industry body Semiconductor Equipment and Materials International (Semi). China is the world's second-largest market for these materials, with a revenue of $15.6 billion, trailing Taiwan's $21.7 billion. Chinese firms are also ramping up investments in advanced packaging.

In September, Biwin Storage, a Shanghai-listed company, announced plans to inject 4.5 billion yuan (approximately $672 million) into a new phase of its wafer-level advanced packaging and testing project, building on earlier investments in 2.5D packaging and redistribution layers. The latest announcement from Sumitomo Bakelite follows a similar expansion plan disclosed four months ago, when the company said its Suzhou facility would increase its semiconductor encapsulation materials capacity in China by about 30%, with operations slated to begin around December 2028.

Since 1997, Sumitomo Bakelite has been manufacturing semiconductor packaging materials in China, gradually expanding its production footprint to meet growing local demand. The firm is one of the world's leading suppliers of semiconductor encapsulation materials, boasting an estimated global market share of around 40%, according to previously disclosed figures.

The expansion also comes as Sumitomo Bakelite seeks to strengthen its position in the global advanced packaging market through strategic acquisitions. In January, the company agreed to buy part of Japanese electronics maker Kyocera's chemical materials business for around 30 billion yen ($189.6 million), including operations producing semiconductor encapsulation materials and bonding pastes.

The deal, expected to close by the end of October, will also incorporate chemical materials operations in Wuxi, another key manufacturing hub in China's Jiangsu province.