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Sector Deep Dive | Glass Substrates Part II: Full Industry Chain Overview and Strategic Positioning Logic

💡 Core insight

Glass substrates are not a single-track market; the combination of 'mature display glass' and 'advanced packaging glass' has led to sharply divergent growth rates.The display segment has matured, delivering a CAGR of approximately 5.5% and providing a stable cash flow base. In contrast, the advanced packaging segment is projected to achieve a CAGR of 14.5% from 2026 to 2030—far exceeding the ~6% CAGR of organic substrates—and represents the true source of valuation upside for the sector.

The industrialization timeline is clear: watch for an inflection point in 2026–2027, penetration rates post-2028, and earnings realization only after 2030.The market is currently pricing in 'who can secure a position in the next wave of industrialization,' rather than near-term profit realization—this is the fundamental reason why certain companies command valuation premiums above those typical of traditional materials or equipment sectors.

Industrialization barriers are concentrated in midstream TGV:Only players mastering the full TGV process chain can approach true mass production readiness. The upstream glass blank market is highly consolidated (CR3 = 88%) and dominated by foreign suppliers, leaving limited near-term room for domestic substitution; equipment providers stand to benefit first from accelerated industrialization.

In terms of key investment candidates, $AGC (5201.JP)$ those with strong downside protection and near-term catalysts from EUV exposure $Ibiden (4062.JP)$ A core supplier to NVIDIA with high earnings visibility; $Samsung Electro-Mechanics (009150.KR)$ Clear dual-engine growth logic driven by rising MLCC volumes and prices, combined with strategic positioning in AI substrates.

🔍 1. Market Opportunity: Display represents the stable base, while advanced packaging offers high-growth upside.

Glass substrates do not constitute a single market but rather comprise two distinct segments: 'mature display glass' and 'advanced packaging glass.' The display segment is already mature, with the global LCD glass market valued at approximately USD 9.64 billion in 2024 and projected to reach USD 15.42 billion by 2033, reflecting a CAGR of about 5.5% from 2025 to 2033—demonstrating steady-state growth that provides a cash flow foundation for the sector.

The advanced packaging segment is the true source of valuation upside for the sector.According to Omdia data, the global glass substrate market is projected to reach USD 18.6 billion in 2026,and surpass USD 32 billion by 2030, representing a CAGR of14.5%, significantly higher than the organic substrate market’s growth rate of approximately 6%. The overall advanced packaging market continues to expand as well: under Prismark’s definition, the global substrate packaging market stood atUSD 12.6 billion in 2024, and will reach18 billion US dollars; among these, ABF substrates amounted toUSD 6.7 billion, 2028USD 10.3 billion。If the penetration rate of glass substrates continues to rise, the potential replacement market could reach several billion dollars.

Chart 1: Market Size and Growth Rate of Glass Substrate-Related Markets

Source: Omdia, Prismark, compiled by Futu Securities

💡 The data in Chart 1 points to a clear conclusion: 2026–2027 will mark the inflection point for industrialization, post-2028 growth will hinge on penetration rates, and earnings realization may only materialize after 2030. Therefore, the core focus of current trading is not near-term profit realization, but rather 'which companies are most likely to secure a position in the next wave of industrialization'—this is precisely the fundamental rationale behind the market assigning certain companies valuation premiums far exceeding those typical in traditional materials or equipment sectors.

🔍 II. Industry Chain Overview

The glass substrate industry chain can be divided into three segments:Upstream materials and equipment—Midstream substrate manufacturing / TGV processing—Downstream packaging and application scenariosFrom the perspective of value distribution and barriers, upstream glass substrates determine the performance ceiling of materials, midstream TGV via formation and metallization dictate mass production yield rates, and downstream advanced packaging customer certifications govern the pace of commercial realization. The distinct differences in value-added contributions and timing of revenue realization across the supply chain form the core framework for understanding the investment logic of each segment.

Exhibit 2: Glass Substrate Industry Chain Map

Source: Compiled by Futu Securities

1. Upstream: Glass substrates are the 'bottleneck,' while equipment serves as the 'scaling lever.'

Advanced packaging glass substrates utilize alkali-free or low-alkali borosilicate specialty electronic glass, which demands extremely high standards for dielectric loss, mechanical strength, and surface flatness. Material performance is jointly determined by high-purity quartz sand, specialty glass powders, and electronic-grade additives, while wet chemicals and plating solutions impact the yield rates of subsequent TGV and metallization steps.Currently, high-end glass substrates are predominantly supplied by overseas players such as Corning, Schott, AGC, and NEG, with a combined CR3 of 88%. The window for domestic substitution has not yet truly opened, making this the most critical bottleneck in the current supply chain.

Equipment represents the segment most directly benefiting from industrial scaling. Key equipment categories include ultrafast laser drilling, TGV metallization/plating, and metrology/inspection systems, among which TGV laser equipment, metallization/plating tools, and metrology instruments constitute the most critical incremental investment areas.Equipment demand typically precedes material revenue recognition, making it the earliest beneficiary of accelerated industrialization and the segment with the most certain near-term revenue realization timeline.

2. Midstream: TGV via formation, via metallization, and multilayer wiring represent the core bottlenecks.

The full process includes: substrate procurement → thinning and polishing → laser modification → etching and via drilling → PVD seed layer deposition → electroplating for via filling → circuit patterning → multilayer buildup → delivery to advanced packaging customers.Three critical process steps determine success or failure: TGV via formation, via wall metallization/copper filling, and RDL multilayer routing.Industry consensus holds that laser-induced etching is currently the optimal approach for large-size TGVs, offering better high aspect ratios, fewer microcracks, and superior via wall quality compared to traditional mechanical drilling.

However,Glass brittleness makes microcracks, edge chipping, and via wall damage difficult to avoid. Defect-free copper filling and alignment challenges in multilayer routing further exacerbate yield issues—this is precisely the true industrialization barrier facing the industry.The industry's true bottleneck is not 'whether holes can be drilled,' but whether high-quality through-holes can be formed without microcracks and achieve low voiding, high-reliability copper filling and subsequent wiring.Whoever masters the full TGV process flow is closer to crossing the mass production threshold.，Currently, the clearest midstream breakthrough opportunities in China are concentrated in TGV processing, glass circuit boards, glass packaging substrates, and laser micro-via equipment.

3. Downstream: Advanced packaging is the main battleground, with CPO, RF IPDs, and MicroLED offering alternative implementation pathways.

On the downstream application side, display technologies still include LCD, OLED, and Mini LED; advanced packaging primarily targets core applications such as GPUs, HBM, CPUs, CPO, and RF IPDs.Commercialization of the advanced packaging main battlefield is progressing slowly, but RF IPDs, CPO, MEMS, and display-related glass circuit boards may generate revenue validation earlier. These represent near-term implementation milestones and serve as key leading indicators for gauging industrialization progress.

🔍 III. Key Companies

1. $AGC (5201.JP)$

AGC is a long-established global leader in materials, currently undergoing a profound 'dual-pillar strategy' transformation—maintaining stable cash flows from core businesses such as automotive and construction (together accounting for approximately 45% of revenue), while shifting strategic resources toward electronic materials, chemicals, and life sciences. The electronics segment contributes about 17% of total revenue, with its display glass substrates holding over 20% global market share, ranking second worldwide (trailing only Corning).Electronic materials contribute 70% of the segment's operating profit and offer stronger growth momentum., with core product categories including EUV photomask blanks, CMP slurries, and advanced packaging glass. The semiconductor business has set a strategic target to double sales by 2030,JPY 200 billionmaking it the key engine for medium- to long-term growth.

By business segment, there is a clear divergence between short-term and long-term drivers.EUV photomask blanks are the key near-term variable for earnings— Recovering wafer fab capital expenditures are driving order recovery, directly determining the elasticity of the electronics sector in 2026–2027. Advanced packaging glass holds significant long-term potential and aligns with Taiwan Semiconductor’s CoPoS and Intel’s EMIB-T roadmaps, butit will contribute almost no meaningful revenue or profit in 2026–2027,due to lengthy production validation cycles, with tangible financial contributions expected only from 2028 onward.

Valuation appears highly attractive, with a projected price-to-book (PB) ratio of approximately1.0x, with a sufficient safety cushion; the forward P/E ratio is approximately17x, which falls within a reasonably low range for Japanese manufacturing companies.The forward dividend yield is close to 3% and is expected to further increase to over 3.5%, giving it the characteristics of a high-quality dividend stock.

Exhibit 3: AGC Automotive and Architectural Glass Revenue and Profit Margins

Source: BBG, compiled by Futu Securities

2. $Ibiden (4062.JP)$

Ibiden is a key player in Japan’s electronic materials sector and maintains a solid leading position globally in ABF substrate packaging. Electronics accounts for 50% of its revenue, with ABF substrates representing its core competitive product—holding a market concentration of 70%–80% in high-layer-count, large-size, and highly complex substrates, and serving as NVIDIA’s top supplier for high-end substrates. Ibiden reported operating profit ofJPY 62 billion，up 30.3% year-over-year, with its electronics business performing strongly, contributingJPY 45.2 billionin operating profit,net profit surged 89% year-over-year。FY March 2027 operating profit guidance stands at JPY 90 billion, significantly above market expectations, primarily driven by approximately 40% year-over-year growth in AI-related revenue.

The company has clearly outlined a three-yearJPY 500 billioncapital expenditure plan, of which roughly two-thirds is funded by advance payments from major customers,order visibility remains extremely high, and the supply-demand gap for ABF substrates continues to widen, with competitive advantages expected to persist beyond 2030.Glass substrate development is also progressing in parallel: the company has been included on Intel's glass core substrate qualification list and has joined Taiwan Semiconductor’s glass substrate development program, positioning it to benefit from both the current ABF substrate upcycle and next-generation technology transitions.

⚠️ Current valuation remains elevated, leaving room for further correction; investors should monitor the margin of safety.

Chart 4: Ibiden Substrate Revenue by Customer

Source: Ibiden, compiled by Futu Securities

3. $Samsung Electro-Mechanics (009150.KR)$

Samsung Electro-Mechanics is experiencing dual momentum from both its MLCC and substrate businesses, with two core drivers advancing in tandem. On the MLCC front, capacity utilization is expected to remain high throughout the year atabove 90%levels; MLCCs for AI servers have significantly lower yields compared to standard products, consuming approximately10 timestimes more capacity than conventional products, and the Tianjin factory (accounting for over 50% of total capacity) continues to face supply shortages.The company has officially issued price increase notices to customers, with hikes ranging from 20% to 30%. It is also negotiating an AI server MLCC supply contract with a major U.S. cloud service provider valued at approximately KRW 500 billion, representing roughly 10% of last year’s total revenue from its Components Division, suggesting the current upcycle is likely to persist.

The substrate business is equally impressive: substrate revenue accounts for about 20% of total revenue, and ABF substrate revenue grew year-over-year by45%%, propelling the company into the ranks of the world’s top five ABF substrate suppliers. It has secured a major AI substrate order from Broadcom and is directly engaging with Apple for validation.The company has formed a joint venture with Sumitomo Chemical for glass substrates, with full-scale production expected by 2027. On the process side, it has achieved breakthroughs with TGV aspect ratios of 10:1 and copper-filled void rates below 0.5%, indicating a level of process maturity considered industry-leading. These process metrics directly address the industry's current critical bottleneck—whether high-quality through-holes can be formed without microcracks and filled with copper at low void rates. Samsung Electro-Mechanics' data suggests it already possesses a near-mass-production-ready technological foundation.

💡 Samsung Electro-Mechanics is a high-quality South Korean electronics components stock, benefiting from three converging catalysts: a long-term upcycle in MLCCs, exposure to AI infrastructure growth, and leading substrate segment momentum.

Exhibit 5: Operating Margin Trends Across Three Business Segments

Source: Goldman Sachs, Jefferies, compiled by Futu Securities

Additional Information

Exhibit 6: Glass Substrate Industry Chain Structure and Representative Domestic and International Companies

Source: Compiled by Futu Securities

Exhibit 7: Mass Production Timeline of Key Global Glass Substrate Players

Source: TrendForce, company filings, compiled by Futu Securities

⚠️ Risk Warning

· Technology development falls short of expectations

· Market demand falls short of expectations

[Investment Advisory Information]

Tim Yang | SFC Central Reference Number: BUR210

[Disclaimer]

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