China’s leading outsourced chip packaging and testing companies are investing over $2.2 billion collectively to expand production capacity, driven by soaring demand for AI-related chips, significant profit growth in early 2026, and Beijing’s push for semiconductor self-reliance.
- Over $2.2 billion invested in chip packaging capacity expansions
- JCET posted nearly 80% profit growth in H1 2026
- Advanced packaging is crucial amid limits to silicon scaling
What happened
China’s top semiconductor packaging and testing firms—Jiangsu Changjiang Electronics Technology (JCET), Tongfu Microelectronics, and Huatian Technology—have announced capacity expansion investments exceeding 15 billion yuan (approximately $2.2 billion) in the first half of 2026. These investments target scaling advanced packaging technologies essential for AI accelerator chips and memory components.
Why it matters
This expansion race highlights the rising importance of advanced chip packaging technologies such as 2.5D and 3D stacking in overcoming the physical limits of Moore’s Law. These technologies enhance chip performance and value, sometimes exceeding the cost of wafer manufacturing, as seen in high-end AI processors like Nvidia’s B200.
China’s capacity boost is also a strategic response to supply constraints faced by leading players such as Taiwan Semiconductor Manufacturing Company (TSMC) and Beijing’s policy objective to increase semiconductor self-sufficiency. The surge in profitability and investment outlays signals China’s intent to reduce reliance on foreign suppliers and capture greater value in the chip production chain.
What to watch next
Market watchers will monitor the progress of the new facilities slated to come online by 2028, especially JCET's Lingang plant and Huatian’s Nanjing site, as they intend to significantly increase China’s domestic high-end packaging output. The success of these projects will be critical for China’s competitiveness in next-generation AI chip production.
Additionally, Tongfu Microelectronics’ upcoming earnings report will provide insights on its growth trajectory and the impact of its partnership with AMD’s next-generation processors. Broader industry trends, including capital expenditure plans by Taiwan’s ASE Technology and investments by smaller domestic players, will also signal the sector’s global and regional momentum.