TSMC thinks it's got exactly what Taiwan needs – another multibillion-dollar chip plant

TSMC confirmed on Tuesday that it is investing $2.87 billion in a chip-on-wafer-on-substrate (CoWoS) advanced packaging fab for AI chips in northern Taiwan.

An application to lease land at the Tongluo Science Park in Miaoli County has been approved as the site of the facility, said the chipmaker. The plant will create approximately 1,500 new jobs.

The news was first reported by local media Commercial Times and later confirmed to multiple global media sources. The Register has asked TSMC for further comment.

The facility will sit on seven hectares of land and will be completed by the end of 2026 with mass production ready in the third quarter of 2027. Construction is set to begin in the second half of 2024.

Commercial Times reported that TSMC ramped CoWoS advanced packaging capacity in the second quarter across domestic fabs to produce over 25,000 wafers per month starting next year and 9,000 wafers a month for the remainder of 2023.

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Most of TSMC's manufacturing exists in Taiwan, which is experiencing growing tensions with China. Such a concentration of chip plants has made some customers nervous about supply chains. Should China decide to "reclaim" Taiwan, an outcome some fear, those supply chains would likely be thoroughly disrupted.

In the company's Q2 2023 report last week, chairman Mark Liu discussed expanding facilities in locations outside of Taiwan, including the US, Japan and Europe.

The Taiwanese chipmaker already has two fabrication plants under construction in Arizona. However, a shortage of skilled workers has led TSMC to delay production until 2025.

During last week's earnings call, CEO CC Wei said the company plans to double its 2023 capacity for advanced packaging in 2024 in order to meet soaring AI chip demand.

But despite the high demand for AI chips, TSMC said [PDF] it expects full year 2023 revenue to decline around 10 percent in US dollar terms. The company reported its first profit drop in 4 years, an annual net profit decline of 23 percent. ®