TSMC has initiated the development of two cutting-edge chip packaging facilities in Taiwan’s Chiayi Science Park, aiming to address the persistent supply constraints in the AI semiconductor sector. These plants will enhance the capacity for advanced packaging—a critical stage that increasingly dictates the speed at which high-performance processors reach cloud data centers, electronics manufacturers, and defense contractors.
This expansion marks a significant phase in TSMC’s efforts to scale up production amid the surging demand for AI chips, which has strained the global supply chain beyond wafer fabrication limits. Taiwan’s science and technology minister, Wu Cheng-wen, highlighted that the ongoing construction is just the beginning, with plans for a third and fourth facility to follow. The full build-out anticipates generating over NT$300 billion (approximately US$9.35 billion) in annual production value and creating more than 9,000 jobs.
The initial packaging plant in Chiayi has already started mass production, with the second plant expected to follow soon. Advanced packaging techniques like TSMC’s chip-on-wafer-on-substrate process are instrumental in managing the increasing complexity and density of modern AI chips, helping to alleviate bottlenecks that currently limit the throughput of high-end semiconductors.
This capacity crunch has wider implications for the electronics market, affecting the availability of servers, smartphones, networking equipment, and other essential devices reliant on sophisticated chips. TSMC’s financial results reflect these trends: consolidated revenue for June rose to NT$442.68 billion, showing month-over-month and year-over-year growth, while first-half revenue surged significantly compared to the previous year, underscoring persistent market pressure driving this expansion.
Taiwan’s Ministry of Environment approved the environmental impact assessment for the second phase of the Chiayi campus earlier this year, clearing a crucial regulatory hurdle. Construction is scheduled to begin in the second half of this year and is projected to be completed by 2031, with the phase’s economic impact estimated at around NT$210 billion. Industry observers identify this development as TSMC’s first substantial manufacturing footprint in Chiayi County, a strategic location that reinforces Taiwan’s position as a central hub in the most challenging segments of AI chip production.