TSMC adds two chip packaging plants in Taiwan for AI demand

TSMC will add two advanced chip packaging plants in Chiayi Science Park as AI-chip demand keeps outpacing supply. The company’s push centers on advanced packaging, the stage that now determines how quickly high-performance processors can reach data centers, electronics makers and defense contractors.

Taiwan’s science and technology minister, Wu Cheng-wen, said the groundbreaking marked the start of a second phase that will eventually include a third and fourth plant. He said the full four-plant build-out is expected to generate more than NT$300 billion, or about US$9.35 billion, in annual production value and create more than 9,000 jobs. The first Chiayi packaging plant has already entered mass production, and the second is expected to begin mass production soon.

The expansion matters because packaging, not just wafer fabrication, has become the next choke point in the semiconductor chain. AI chip designers such as Nvidia continue to pull more capacity than the industry can deliver, and TSMC’s chip-on-wafer-on-substrate process is part of the effort to move more advanced chips through the system. For U.S. consumers, that bottleneck reaches beyond headline AI hardware. It affects the supply of servers, smartphones, networking gear and other electronics that depend on high-end semiconductors.

TSMC’s own revenue figures show how strong that demand remains. The company said June consolidated revenue reached NT$442.68 billion, up 6.2 percent from May and 67.9 percent from June 2025. First-half revenue totaled NT$2,404.48 billion, up 35.6 percent year on year, underscoring the market pressure behind the Chiayi expansion.

Regulators had already cleared an important step for the project. Taiwan’s Ministry of Environment approved the initial environmental impact assessment for Phase 2 of the Chiayi County campus on January 12, 2026. Construction was expected to begin in the second half of 2026 and finish by 2031, with local reporting putting the phase’s economic value at about NT$210 billion.

Some industry coverage has identified the site as AP7, describing it as TSMC’s first major manufacturing footprint in Chiayi County. However it is labeled, the project adds to Taiwan’s role as the central hub for the most difficult part of AI chip production, where manufacturing capacity alone is no longer enough and packaging capacity has become decisive.