Nvidia teams with six partners to expand AI chip capacity

Nvidia on Wednesday announced plans with six manufacturing partners to expand global capacity for substrates, advanced packaging, chip testing and optical engines. The plans include a $1.1 billion advance to Taiwan's King Yuan Electronics (KYEC) to help build testing facilities in the United States, according to the company's release issued at GTC Berlin.markets.businessinsider.com

The other partners are Amkor Technology ↗ 3.77%, IBIDEN, Samsung Electro-Mechanics, Siliconware Precision Industries (SPIL) ASE Technology Holding Co., Ltd. ↗ 3.58% and Unimicron Technology. Nvidia said the deals add redundancy to its supply chain. "We are in the midst of the largest infrastructure buildout in human history. Demand is extraordinary. Capacity is the constraint," CEO Jensen Huang said in the announcement.markets.businessinsider.com

Substrates and packaging

Nvidia plans to increase substrate capacity for its products 2.5 times over the next three years, and it said more agreements are in the works. Under a deal announced earlier this year, Nvidia is providing a multibillion-dollar advance for IBIDEN's Ono Plant in Japan. The plant is targeting three times its current capacity, with new output starting in the first quarter of 2028. Samsung Electro-Mechanics is joining the substrate supply chain with existing capacity in South Korea and new factories planned in Sejong and Busan. Unimicron's expansion in Taiwan is expected to begin adding capacity in the second quarter of 2027, Investing.com reported.investing.com

In South Korea, Nvidia and Amkor are targeting a more than 300% increase in interposer wafer capacity by the end of 2028. Amkor shares rose 8% on Wednesday after the news.investing.com

Testing and optics

Nvidia expects its total chip-testing capacity to double from 2026 to 2027, with buildouts in the U.S., Taiwan and Singapore. High-volume production at the KYEC facilities in the U.S. is targeted for April 2027, and the expanded Singapore operations are set to start high-volume output in February 2027, RTTNews reported. SPIL plans to increase capacity in Taiwan for the optical engines used in co-packaged optics 15 times by mid-2027, then double it again by the end of 2028.rttnews.com

Scale of commitments

KYEC's advance was the only deal with a disclosed price. StockTitan noted that the $1.1 billion is small compared with the $279 billion in supply commitments in Nvidia's quarterly filing for the period ended July 26, 2026. Of that total, $160 billion was added in a single quarter. The outlet also cautioned that capacity multiples "do not convert into a number of chips or dollars of sales," because each target covers a different step in production and Nvidia did not disclose starting capacity levels.stocktitan.net