Taiwan’s TSMC, the world’s largest foundry (semiconductor contract manufacturing) company, is focusing on expanding its advanced packaging production capacity in response to the demand for artificial intelligence (AI) semiconductors.

According to foreign media such as Taiwan Economic Daily on Nov. 19, TSMC plans to carry out projects to establish 10 new factories worldwide next year. The new investment will focus on advanced processes such as 2nm (nanometer, one-billionth of a meter) and advanced packaging processes such as Chip on Wafer on Substrate (CoWoS)-L and CoWoS-S.

Among the 10 factories TSMC will build next year, three will be advanced packaging plants. Specifically, these include AP8 (Advanced Packaging 8), which acquired the liquid crystal display (LCD) line of Innolux in Chiayi County, Taiwan, and a plant to be built in the Chiayi Science Park.

It is the first time since its establishment that TSMC will build 10 factories in a single year. In 2021, when semiconductor demand increased right after COVID-19, the company recorded seven factories, and last year it was at the level of four. Accordingly, TSMC’s capital expenditure (CAPEX) next year is expected to reach $34 billion to $38 billion (approximately 53 trillion won). This not only exceeds the investment amount forecasted by the existing market ($32 billion to $36 billion) but also has the potential to surpass the previous maximum capital expenditure of $36.29 billion in 2022.

Due to the demand for AI and high-performance computing (HPC), the order volume for CoWoS, a packaging technology led by TSMC, is increasing even faster. This is because Nvidia is using this process to create the latest AI accelerators, such as Blackwell, and big tech companies like Apple have also joined the order queue. This technology involves interconnecting two or more semiconductor chips on a wafer and placing them on a package substrate. Although TSMC has doubled its CoWoS production capacity this year compared to last year, the supply shortage continues.

At the third-quarter earnings announcement last month, TSMC Chairman Mark Liu said, “We have made every effort to more than double our CoWoS production capacity this year, but demand still exceeds supply,” adding, “TSMC will continue to perfectly meet customer demands for advanced CoWoS packaging capacity.”