Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, said on Tuesday that it plans to invest nearly T$90 billion ($2.87 billion) in an advanced packaging facility in northern Taiwan to meet growing demand for AI chips.
The company said in a statement that it will establish the plant in the Tongluo Science Park, where it already has a 12-inch wafer fab. The plant will use TSMC’s chip on wafer on substrate (CoWoS) technology, which involves placing multiple chips into a single device, lowering the added cost of more powerful computing.
TSMC CEO C.C. Wei said last week that the company is unable to fulfil customer demand driven by the AI boom and plans to roughly double its capacity for advanced packaging by the end of next year.
“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,” Wei said after the company reported a 23% fall in second-quarter profit.
TSMC said its position as the leading manufacturer of AI chips – including for chip designers Nvidia Corp and Advanced Micro Devices – has not offset broader end market weakness as the global economy recovers more slowly than it had expected.
The company lowered its revenue growth forecast for this year to 20% from 25%, citing uncertainties related to the COVID-19 pandemic and the U.S.-China trade war.
TSMC is also facing increasing competition from rivals such as Samsung Electronics Co (005930.KS) and Intel Corp (INTC.O), which are ramping up their investments in chipmaking capacity and technology.
TSMC said it will continue to invest in advanced technologies and capacity expansion to maintain its leadership and meet customer needs. The company plans to spend $15 billion to $16 billion on capital expenditure this year, up from $14.9 billion last year.