DRIVEN by a surge in demand for artificial intelligence (AI), Taiwan Semiconductor Manufacturing (TSMC) plans to invest nearly T$90 billion (S$3.8 billion) in an advanced packaging facility in northern Taiwan, the company said on Tuesday (Jul 25).

“To meet market needs, TSMC is planning to establish an advanced packaging fab in the Tongluo Science Park,” the company said in a statement.

CEO CC Wei said last week that TSMC is unable to fulfil customer demand driven by the AI boom and plans to roughly double its capacity for advanced packaging – which involves placing multiple chips into a single device, lowering the added cost of more powerful computing.

For advanced packaging, especially TSMC’s chip on wafer on substrate (CoWoS), capacity is “very tight”, Wei said after the company reported a 23 per cent fall in second-quarter profit.

“We are increasing our capacity as quickly as possible. We expect this tightening will be released next year, probably towards the end of next year.”

The world’s largest contract chipmaker said TSMC’s position as the leading manufacturer of AI chips – including for chip designers Nvidia and Advanced Micro Devices – has not offset broader end market weakness as the global economy recovers more slowly than it had expected.

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The Tongluo Science Park administration has officially approved TSMC’s application to lease land, the company said, adding the new plant in the northern county of Miaoli would create about 1500 jobs.

Even as the leading Apple supplier ramps up its expansion abroad, it plans to keep its most advanced chip technology in Taiwan, a global powerhouse in manufacturing semiconductors that power everything from smartphones to electric vehicles. REUTERS