Track Hyper | iPhone 17 series hindered by core material shortages

Author: Zhou Yuan / Wall Street News

The inventory of the iPhone 17 series is under significant pressure due to a shortage of materials.

A material known as low coefficient of thermal expansion (Low CTE) fiberglass cloth is currently facing a supply shortage.

Wall Street News has learned from the supply chain that the shortage of low CTE fiberglass cloth materials has led to extremely tight inventory for Apple's new generation smartphone, the iPhone 17 series.

“Cook is anxious and urging suppliers every day,” a supply chain insider told Wall Street News. “This material has a huge impact; it is an essential core component material for SoC chips, RF packaging substrates, camera modules, and batteries.”

Low CTE fiberglass cloth is primarily used in high-precision, high-heat dissipation core electronic components in smartphones. By matching the thermal expansion characteristics of chips and substrates, it reduces mechanical stress caused by temperature changes, thereby ensuring device stability and longevity.

In smartphones, processors (CPU/GPU), memory modules (such as NAND/DDR), and wireless communication modules (such as 5G RF modules) need to connect to the motherboard through semiconductor packaging substrates (IC Substrate).

The thermal expansion coefficient of chips (such as silicon-based chips) is very low (about 3 ppm/℃). If the CTE of the substrate material (such as traditional epoxy resin) is too high (>10 ppm/℃), temperature changes can lead to interface delamination or solder joint fractures.

Low CTE fiberglass cloth, as a reinforcement material for substrates, must also consider low dielectric loss (Low Df) characteristics to reduce signal transmission loss.

In the packaging substrates of Apple's A-series chips or Qualcomm Snapdragon processors, low CTE fiberglass cloth serves as an insulating and reinforcing layer, supporting multi-layer circuit structures and ensuring stable connections between the chip and PCB.

At the same time, low coefficient of thermal expansion fiberglass cloth is also used in RF packaging substrates, high-density interconnect (HDI) circuit boards (HDI multi-layer PCBs, whose inner layers are reinforced with low CTE fiberglass cloth, i.e., CCL), camera modules (flexible circuit substrates), and battery management modules (battery packaging circuit boards).

Substrates and PCBs are key components in the layered collaboration of electronic systems, with substrates focusing on chip-level packaging interconnections and PCBs achieving system-level circuit integration.

In summary, low coefficient of thermal expansion fiberglass cloth is a core material for high-performance chip packaging, high-frequency communication modules, and precision optical components in smartphones. Its technical barriers are high, and the difficulty of substitution is great, making it one of the high ground in the competition for electronic materials in the 5G/6G era.

Among A-share listed companies, Honghe Technology (603256) clearly has the production capacity for low coefficient of thermal expansion fiberglass cloth and has achieved product certification and mass production.

Honghe Technology positions itself as a "substitute for high-end imported products," with its low coefficient of thermal expansion products featuring high technological content and high added value, reaching an internationally leading level.

In the field of ultra-thin and extremely thin cloth, Honghe Technology is the world's largest producer, with products widely used in high-demand areas such as smartphones, servers, automotive electronics, and AI servers Honghe Technology focuses on the research and production of mid-to-high-end electronic-grade fiberglass cloth and is one of only two companies in the world capable of mass-producing 0.03mm ultra-thin cloth (the other being Japan's Asahi Kasei), and has obtained Apple MFi certification.

Apple MFi certification (Made for iPhone/iPad/iPod) is an authorization system designed by Apple for third-party accessory manufacturers, aimed at ensuring compatibility, safety, and consistency of user experience between external accessories and Apple devices.

According to Honghe Technology's prospectus, the high-end ultra-thin cloth and ultra-thin cloth produced by the company are core suppliers of electronic-grade fiberglass cloth for Apple products such as iPhone, iPad, and iWatch, jointly leading the supply in this field with Japan's Asahi Kasei.

The company's ultra-thin cloth (≤0.03mm) is suitable for packaging substrates of Apple's A-series chips; its low CTE glass cloth is used for 5G RF modules and AI chip heat dissipation.

Honghe Technology has collaborated with leading global copper-clad laminate manufacturers (such as Panasonic and Taiko Electronics) for over 10 years, and these manufacturers supply PCB substrates directly to Apple.

Honghe Technology's "annual production of 50.4 million meters of high-end electronic-grade fiberglass cloth for 5G" project was fully put into production in 2023, and the products are gradually obtaining certification from downstream customers.

Additionally, the Hong Kong-listed Kintor Pharmaceutical has relevant layouts for this material technology