The artificial intelligence boom has exposed an overlooked weakness in global manufacturing: a supply crisis for glass-fibre cloth, a specialist material that sits inside every advanced AI chip package. One Japanese company controls the majority of the world's supply, and neither it nor any competitor can expand fast enough to meet demand.
A Japanese company called Nittobo controls roughly 90% of the global supply of specialist glass-fibre cloth (T-glass), which sits inside every advanced AI chip package.T-glass is a low-CTE (coefficient of thermal expansion) glass cloth used in the organic core of IC substrates, the interconnect layer that sits between a chip and its printed circuit board, helping keep large, high-heat chip packages dimensionally stable as packaging gets denser and more complex.
The shortage has triggered an unusual scramble at the highest levels of tech industry hierarchy.Nvidia CEO Jensen Huang made trips to South Korea in late 2025 to court memory manufacturers; Apple sent representatives to Japan to try to secure greater supplies of glass-fibre materials produced by Nittobo, including interactions with Japanese government officials to see if Apple could be awarded a greater share of production.Nvidia and AMD have dispatched staff to Nittobo's headquarters to try to secure more favourable deals.
The problem stems from structural mismatch between supply and demand.Nittobo has announced plans to raise prices within the year, and analysts expect the increase could exceed 25%.Prices have risen between 20 and 30%, while lead times for downstream materials like copper-clad laminates have stretched from their normal 8 to 10 weeks to beyond 20.
Nittobo's expansion plans offer limited relief.The company has decided to expand glass cloth production capacity by constructing a new factory building on the premises of the Fukushima Enterprise Centre, with total investment of approximately 15 billion yen and production scheduled to begin in the fourth quarter of fiscal 2026. Yetanalysts estimate the supply-demand imbalance won't be resolved until the second half of 2027 at the earliest.
The bottleneck reveals a deeper supply-chain vulnerability.The material requires specialised electric melting furnaces operating at temperatures between 1,600 and 1,700 degrees Celsius, and the manufacturing process takes years of investment and expertise to scale, involving melting raw silica-rich glass, then spinning it into yarn and weaving it into ultrathin cloth. Few competitors have attempted to enter the field; those that have struggled with yields low enough to deter meaningful market entry.
Tech companies are hedging their bets.Apple is fast-tracking the qualification of alternative material providers like Grace Fabric Technology and Taiwan Glass to break Nittobo's stranglehold.Intel has pivoted to using solid glass substrates rather than cloth-reinforced options for its Xeon chips, effectively bypassing the cloth shortage strangling competitors.
Nittobo itself is taking steps to diversify risk.By 2027, roughly 20% of Nittobo's glass cloth is expected to be woven by Nanya, as disclosed in a recent letter to shareholders. The company is also investing in yarn production capacity in Taiwan.
The crisis illustrates how AI infrastructure remains tethered to physical reality.Analysts warn that the same pattern could repeat with other critical materials in the integrated circuit substrate stack, including copper foil layers, solder mask, and copper-clad laminates as potential chokepoints. The shortage has forced corporate strategy to be shaped by the availability of an obscure textile material, reminding industry leaders that even the most advanced technology depends on basic, highly specialised manufacturing.