TSMC announced the construction of three new advanced packaging fabs in Chiayi Science Park’s second phase, aiming to alleviate critical supply constraints in AI chip manufacturing and strengthen Taiwan’s semiconductor cluster.
- Phase II adds three packaging fabs on 90 hectares in southern Taiwan.
- Expansion targets AI accelerator demand using TSMC’s CoWoS technology.
- Chiayi to join wider Taiwan semiconductor corridor driving $9.35B annual output.
What happened
TSMC has initiated the development of three new advanced packaging fabs as part of the second phase of the Chiayi Science Park in southern Taiwan. The groundbreaking ceremony was led by National Science and Technology Council minister Wu Cheng-wen. These fabs will join two Phase I facilities that commenced mass production in June, creating a packaging cluster expected to cover approximately 90 hectares.
This expansion aims to resolve capacity constraints in packaging processes essential for AI chips and high-performance accelerators, which utilize TSMC’s CoWoS technology to fuse logic and stacked memory. The site is also planned to attract firms from biotechnology, aerospace, and precision machinery sectors, aligning with a broader initiative to establish a comprehensive semiconductor and AI corridor across southern and central Taiwan.
Why it matters
Packaging has become a critical bottleneck in the global AI chip supply chain, with major companies like Nvidia and Google relying on advanced packaging solutions to meet growing demand. TSMC’s expansion is a strategic response to this issue, enhancing its ability to supply complex AI accelerators that require integrated logic and high-bandwidth memory packaging.
With anticipated annual output from the Chiayi site exceeding NT$300 billion ($9.35 billion) and supporting around 9,000 jobs, the project reinforces Taiwan’s position as a linchpin in semiconductor manufacturing. It also reflects the industry's pivot toward AI and high-performance computing, where packaging technology plays a decisive role in overall chip performance and availability.
What to watch next
While the groundbreaking signals strong momentum, TSMC and officials have yet to disclose construction timelines, costs, or specific dates for operational capacity at these new fabs. Stakeholders will be keen to monitor progress updates and how the additional capacity impacts supply chain tightness in AI accelerators over the coming quarters.
TSMC’s upcoming earnings conference will also draw attention for clues on how this expansion fits within the company’s broader financial outlook and strategic priorities amid record revenue growth and sustained market demand. The development symbolizes ongoing shifts in Taiwan’s semiconductor landscape, where Chiayi, once an agricultural area, now emerges as a critical hub for advanced semiconductor production.