Nvidia pays Ibiden, Samsung Electro-Mechanics and Unimicron for substrate capacity; AT&S fell 18.6%

An 18.6% day that named no company news

AT&S▼−1.00% — AT&S, down 1.00 percent today, Austria's listed maker of high-end IC substrates, the layered circuit boards a processor sits on and connects through ², fell 18.6% in Vienna on October 22, the biggest drop in the ATX, Vienna's blue-chip index, which lost 4.6% ¹. The day's market report↗ blamed renewed doubts about AI spending and a Wall Street technology rout, with Nasdaq futures down nearly 2%, and named nothing from the company ¹.

Nvidia now pays to reserve its suppliers

The day before, at its GTC Berlin event, Nvidia▼−0.54% — Nvidia, down 0.54 percent today said it would lift substrate capacity for its products 2.5 times within three years ³⁴. Chief executive Jensen Huang's summary: "Demand is extraordinary. Capacity is the constraint." ³

Nvidia is paying for the buildout. Ibiden▼−1.00% — Ibiden, down 1.00 percent today of Japan receives a multibillion-dollar capacity reservation advance for its Ono plant, which targets triple current capacity and ramps from the first quarter of 2028 ³. Samsung Electro-Mechanics▼−2.01% — Samsung Electro-Mechanics, down 2.01 percent today of Korea joins Nvidia's substrate chain with jointly invested dedicated lines at Sejong and Busan; by 2028, production for Nvidia is projected to take a significant share of its substrate output ³². Taiwan's Unimicron▼−1.36% — Unimicron, down 1.36 percent today adds capacity from the second quarter of 2027 under an Nvidia reservation agreement ³.

Nvidia's payments are not purchase orders: the reservation advances and co-funded lines hold capacity at those three makers for its products ³².

Kulim is the counterbet, on AMD's and Marvell's money

All three make the substrates AT&S makes, and AT&S appears nowhere in Nvidia's announcement↗; its expansion is financed from outside that circle ³. On June 15 it unveiled a €1.5–2.0 billion expansion of its Kulim plant↗ in Malaysia, based on agreements with AMD▲+1.59% — AMD, up 1.59 percent today and one other customer, fully supported and financed by long-term customer commitments ⁵.

The guidance rose with it: for the 2026/27 financial year, revenue up 45–55% at constant currency, an EBITDA margin of 32–37%, capex of roughly €1.0–1.2 billion, and operating free cash flow still positive ⁵. On September 22 the second customer was named↗: Marvell▲+1.75% — Marvell, up 1.75 percent today, a Silicon Valley designer of data-infrastructure chips ⁶. Customer prepayments already stood at €907.2 million on June 30 ⁷.

The June quarter backed the plan. Revenue reached €548.7 million, up about 38% year over year, EBITDA hit €165 million at a 30.1% margin against 17.7% a year earlier, and net income was €40.85 million after a €60.5 million loss ⁸⁷.

€137.50 against a €380 target

Deutsche Bank's view is €380: the bank raised its target from €320 on October 8↗ and kept its buy rating ⁷. The stock market's view is €137.50, the weekend price on October 24, down from €157.80 on October 22 ⁸ and €144.00 on October 23 ⁷, inside a 52-week range of €25.00 to €242.00 ⁹.

Management tightened the balance sheet anyway, redeeming its €350 million 2022 hybrid bond↗, a bond that counts partly as equity, on October 22 into new financing at roughly half the coupon ⁹. The bear case is capacity arithmetic: three funded rivals and 2.5 times the substrate supply by 2028 ³.

Two numbers decide it on November 5

The half-year report on November 5 is the first set of results since Marvell signed ⁸. Two lines in it answer the market's doubt: prepayments from AMD and Marvell, and operating cash flow, which ran at €39.9 million in the June quarter against more than €1.0 billion of planned capex ⁸⁵. If those two numbers do not improve, the 43% discount stands ⁸⁵.