Growth in demand for AI chips: Nitto Boseki to raise fiberglass prices

The explosive growth in demand for AI-chips has led to unexpected consequences in the materials market: there is a shortage of T-type fiberglass, a critical component in the production of printed circuit boards used in these chips. The leading supplier of this material, Japanese company Nitto Boseki, announced plans to increase production volumes, but acknowledged that even these measures will not be able to fully meet the growing demand. As a result, the company plans to raise the prices of its products already this year.

T-type fiberglass is a specialized material used in the production of high-performance printed circuit boards, which are used in servers, data centers, and other devices necessary for artificial intelligence to operate. The growth in popularity of generative AI models such as ChatGPT and DALL-E has led to a sharp increase in demand for these chips, and consequently for fiberglass. Current production capacities simply cannot handle such a surge.

Nitto Boseki plans to gradually increase production, starting from the end of this year, with the aim of tripling volumes by 2028 compared to 2025 levels. This will require significant investments in new equipment and expansion of existing production lines. However, the company emphasizes that even after the new capacities come online, the gap between demand and supply will remain substantial.

Citigroup analysts forecast that price increases for T-type fiberglass could be 25% or more. This will have a significant impact on the cost of AI-chip production and, as a consequence, on the final cost of consumer electronics, such as smartphones and laptops. Electronics manufacturers will likely be forced to pass some of these costs on to consumers, resulting in price increases on store shelves.

The rise in fiberglass prices is just one example of how the rapid growth of the artificial intelligence market affects the entire supply chain. Shortages of components and materials could become a serious obstacle to further industry development and slow the implementation of new technologies. Companies need to adapt to new conditions and find ways to optimize production and reduce costs.

In conclusion, the shortage of T-type fiberglass and the increase in its prices are a consequence of the enormous demand for AI-chips. This situation highlights the interconnectedness of different industries and shows how the development of artificial intelligence affects the entire economy. Consumers should prepare for a possible increase in electronics prices, and manufacturers should look for ways to solve the materials shortage problem.