Taiwan Semiconductor intensifies layout for the "second main battlefield"! Plans to build three more advanced packaging factories

According to reports, Taiwan Semiconductor (TSM.US) will add three advanced packaging factories in the second phase of its construction plan at the Chiayi Science Park in southern Taiwan. This expansion plan was announced by relevant personnel during the groundbreaking ceremony for the second phase held last Sunday, stating, "Today's groundbreaking ceremony marks the official launch of the second phase, which will include the third and fourth factories."

The individual mentioned that the park, covering approximately 90 hectares, will develop into an advanced packaging industry cluster led by Taiwan Semiconductor. Reports indicate that the two advanced packaging factories planned in the first phase began mass production last month. He stated that once all four factories are operational, the Chiayi Science Park is expected to generate an annual output value of over NT$300 billion (approximately US$9.35 billion) and create over 9,000 job opportunities. He also noted that the Chiayi Science Park will work with other important science parks in Taiwan to build a complete artificial intelligence (AI) and semiconductor industry corridor.

In recent years, with the explosive demand for AI computing power, packaging has risen from a traditional backend process to a core strategy on par with wafer manufacturing. Taiwan Semiconductor holds a leading global position in advanced packaging, primarily meeting AI chip demands through technologies such as CoWoS, InFO, and SoIC, and is accelerating its evolution towards next-generation technologies like glass substrates (CoPoS). According to overseas industry analysis, mass production of CoPoS panel-level packaging is expected to be delayed until 2029, while SoIC stacking technology is also expected to achieve more advanced node mass production in the same year.

As the AI arms race intensifies, the bottleneck in packaging capacity has not eased since the end of 2022 and has become one of the core pain points constraining the AI chip supply chain. Despite major manufacturers expanding production and advancing new technologies, the supply tightness continues.

The cost of processes below 3nm has skyrocketed and is approaching physical limits, and simply shrinking transistors can no longer meet the demand for AI computing power to "double every three months." The real bottleneck has shifted to how to efficiently stack and connect computing chips, HBM memory, and power management chips—this is advanced packaging. CoWoS is currently the only large-scale validated 2.5D/3D packaging solution. Without it, even if the H200, B200, MI300X, and the newly released next-generation AI GPUs are produced well, they can only sit on the production line "waiting to be assembled." It is no exaggeration to say that the speed of packaging determines the shipping limit of AI chips.

Taiwan Semiconductor's CoWoS capacity will remain fully utilized between 2024 and 2026, with order visibility extending to 2027. Taiwan Semiconductor plans for CoWoS capacity to grow at a compound annual growth rate of over 80% from 2022 to 2027, and SoIC capacity to grow at a compound annual growth rate of over 90%. The nearly doubling capacity growth each year makes large-scale factory construction an inevitable option.

The latest data released by Taiwan Semiconductor shows that thanks to the surge in demand driven by AI, the company's revenue in June was NT$442.68 billion, a year-on-year increase of 67.9% and a quarter-on-quarter increase of 6.2%, with growth far exceeding market average expectations; second-quarter revenue was NT$1.27 trillion, a year-on-year increase of 36%, better than the market average expectation of NT$1.264 trillion; total revenue for the first half of 2026 was NT$2.40448 trillion, a year-on-year increase of 35.6% Taiwan Semiconductor will release its complete second-quarter financial report and hold a conference call on Thursday. Currently, the market generally expects TSMC's adjusted earnings per share for the second quarter to be $3.83, with revenue of $39.32 billion. Analysts have pointed out that TSMC is expected to raise its full-year performance guidance at that time and simultaneously increase its capital expenditure plan for 2027