TSMC to build two more packaging plants in Taiwan amid AI chip crunch

TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 3.52% will build two additional advanced chip packaging plants at the Chiayi Science Park in southern Taiwan as part of a Phase II expansion, Taiwan's science minister confirmed on Sunday, as the chipmaker races to meet surging demand for AI-related packaging capacity.reuters+1

Scaling Up to Meet AI Demand

The expansion will bring the total number of advanced packaging facilities at the Chiayi complex to four, with the full cluster expected to reach approximately $930 million in annual output, according to reports. TSMC's first advanced packaging plant at the park entered mass production in June 2026, while its second facility is expected to come online soon.finance.biggo+2

The move comes as TSMC struggles to keep pace with demand for its chip-on-wafer-on-substrate (CoWoS) advanced packaging technology, which is critical for assembling the high-bandwidth memory stacks used in AI accelerators from customers including Nvidia and AMD. Reports indicate the supply-demand gap for CoWoS capacity stands at around 20%, though it is expected to narrow to 10% by the end of 2026. The shortage has been severe enough to push some orders to rival foundries, including Intel.wccftech+1

Broader Capacity Push

The Chiayi expansion is part of a wider buildout by TSMC, which said at its recent Taiwan Technology Symposium that it plans to launch five new fabs in 2026 and expand CoWoS and SoIC advanced packaging capacity by more than 80% annually through 2027. The company also noted that its largest CoWoS solution — spanning 5.5 reticle sizes — has achieved yields exceeding 98%.design-reuse

TaiwanPlus reported that up to three new packaging fabs are planned at Chiayi as part of the broader effort to create an advanced packaging industry cluster in southern Taiwan led by TSMC. Government officials described the Phase II site as essential infrastructure for Taiwan's AI semiconductor strategy.thenextweb+1