Apple scrambles for chip materials as AI boom creates supply crunch lasting until 2027

Apple faces critical shortage as AI boom strains supply chain - 9to5Mac

Nikkei Asia reports that Apple has been scrambling to solve a glass cloth shortage, with the supply crunch projected to last until at least the second half of 2027. Here's what that means. According to Nikkei Asia, Apple was one of the first companies to turn to glass cloth fiber as part of the substrate to iPhone chips, partly due to its "dimensional stability, rigidity and ability to facilitate high-speed data transmission". As Nikkei Asia explains it: Glass cloth is a critical component in chip substrates and printed circuit boards (PCBs), themselves the building blocks of electronic devices, and the most advanced types of this cloth are made almost exclusively by one Japanese company: Nitto Boseki, or Nittobo for short. The problem is that, thanks to the AI boom, companies such as Nvidia, Google, and Amazon have also been turning to high-end glass cloth as part of the substrate for their AI chips, creating a supply crunch much like the memory chip shortage that has driven prices up in recent weeks. That pressure has reportedly prompted Apple, AMD, and Nvidia to dispatch staff to Japan in an effort to secure supplies, an initiative that ultimately went nowhere. As one source told Nikkei Asia, "No additional capacity is no additional capacity, even if you pressure Nittobo." In an attempt to address the situation, in addition to reaching out to the Japanese government, Nikkei Asia says that Apple has also been turning to alternative sources. However, bringing new suppliers up to spec remains a challenge: Apple is also working hard to cultivate alternative sources, including sending employees to a small Chinese glass fiber maker known as Grace Fabric Technology (GFT) and asking [Mitsubishi Gas Chemical] to help oversee the Chinese material supplier's quality improvement, two sources familiar with the matter said. And Many new entrants are hoping to capitalize on the constrained supply, such as Taiwan Glass, a traditional glass maker based in Taipei, and China's Taishan Fiberglass, Grace Fabric and Kingboard Laminates Group. But the technological barriers to entry are extremely high -- every glass fiber is much thinner than a human hair and must be perfectly round and free of any bubbles -- and newcomers are struggling to achieve adequate capacity and consistent quality, people familiar with the situation said. No tech giant is willing to risk mounting their high-end chips on substrates that could compromise the quality of its final products, industry executives told Nikkei Asia. Finally, the report also mentions Qualcomm, one of the largest mobile chip providers, as yet another company scrambling to mitigate the situation, with no short-term solution in sight.

Apple Struggling With Key Material Shortage as AI Chips Drain Supply

Apple is confronting a newly intensified supply-chain challenge for future chips as the AI boom has created a global shortage of a key material, Nikkei Asia reports. Apple is said to be struggling to secure sufficient supplies of high-end glass cloth fiber, a material that plays a critical role in the printed circuit boards and chip substrates used in iPhones and other devices. The most advanced forms of this glass cloth are apparently produced almost entirely by one supplier, Nitto Boseki. Apple began using Nittobo's premium glass cloth in chips years before AI computing drove widespread demand for similar materials. As AI workloads have expanded, however, companies such as Nvidia, Google, Amazon, AMD, and Qualcomm have moved aggressively into the same supply pool, placing unprecedented pressure on Nittobo's limited capacity. In response, Apple has taken several unusual steps to protect its supply chain. The company reportedly sent staff to Japan last autumn and stationed them at Mitsubishi Gas Chemical, which produces substrate materials and relies on Nittobo's glass cloth. Apple is also believed to have approached Japanese government officials for assistance in securing supply. Apple is additionally working to qualify alternative suppliers, though progress has been slow. Apple has engaged with smaller Chinese glass fiber producers, including Grace Fabric Technology, and asked Mitsubishi Gas Chemical to help oversee quality improvements. Other potential entrants from Taiwan and China are attempting to scale production, but industry sources said achieving consistent quality at the required level remains difficult. Each glass fiber must be extremely thin, uniform, and free of defects, as the glass cloth is embedded deep inside the chip substrate and cannot be repaired or replaced after assembly. Because of this, major chipmakers have been reluctant to adopt lower-grade materials, even temporarily. Apple has discussed using less-advanced glass cloth as a stopgap, but doing so would require extensive testing and validation and would not significantly ease supply constraints for 2026 products. Similar concerns are affecting other chipmakers.