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TSMC builds out Chiayi packaging hub as AI bottleneck bites hard

TSMC is adding two more advanced chip-packaging plants at Chiayi Science Park, expanding a southern Taiwan site into a four-plant cluster. The move targets a key AI hardware bottleneck as demand from Nvidia and other chip designers keeps packaging capacity tight.

Published about 9 hours ago
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TSMC to add 2 advanced chip packaging plants in Chiayi, Taiwan minister says

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TSMC to add 2 advanced chip packaging plants in Chiayi, Taiwan minister says

TSMC builds out Chiayi packaging hub as AI bottleneck bites hard
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A bottleneck turns into factory walls

Taiwan Semiconductor Manufacturing Co. is moving to add two more advanced chip-packaging plants at Chiayi Science Park, turning a southern Taiwan site into a four-plant cluster aimed at one of the AI hardware industry's tightest constraintsthenews. National Science and Technology Council Minister Wu Cheng-wen said at a Sunday groundbreaking that the first plant there has entered mass production, the second is expected to start soon, and the new phase will include a third and fourth facilitythenews.

The government expects the fully built-out park to generate more than NT$300 billion, or about $9.35 billion, in annual production value and create more than 9,000 jobsthenews. The expansion matters because advanced packaging is where high-end processors, memory and interconnects are assembled into the large modules used in AI accelerators.

AI demand is pushing past wafer supply

TSMC is expanding chip-on-wafer-on-substrate capacity as demand from AI chip designers such as Nvidia continues to exceed supplythenews. That pressure is showing up in the company's broader numbers: TSMC reported June revenue of NT$442.68 billion, up 67.9% from a year earlier and 6.2% from May, while first-half revenue rose 35.6% to NT$2.4 trillionyahoo.

SemiAnalysis analyst Sravan Kundojjala told CNBC that TSMC's demand-supply situation in AI remains tight and that the company is sold out on its N3 process, which is being targeted by leading AI GPU and CPU customers this yearyahoo. He estimated TSMC is on track for more than $40 billion in AI chip revenue in 2026, close to a quarter of total revenueyahoo.

Chiayi is becoming a packaging bet

The Chiayi push builds on plans disclosed in 2024, when Taiwan officials said TSMC would construct two CoWoS plants on 12 hectares at the science park, with completion expected by the end of 2026 and mass production slated for 2028digitimes. The new announcement signals that the site is moving from a two-fab project toward a larger packaging campus.

Supply-chain reporting earlier this year pointed to rapid work at TSMC's Chiayi AP7 facilities, with one plant expected to enter production in 2026 and Phase 2 of the park spanning about 90 hectares, enough space for the equivalent of around six advanced packaging facilitieswccftech. TrendForce also cited estimates that TSMC's advanced-packaging capital spending could grow at a 24% compound annual rate from 2025 through 2027, while critical tools such as PVD vacuum systems remain tightwccftech.