Mass production and groundbreaking in the same month, ten-year long-term contract locks in North America: TSMC’s packaging “second growth curve” emerges

```

TSMC is expanding at an unprecedented pace, upgrading advanced packaging from an ancillary process of wafer manufacturing to an independent strategic growth engine. The second phase base of the Chiayi Science Park has officially launched, and with the dual-factory layout in Arizona, USA, TSMC's advanced packaging footprint is expanding simultaneously in Taiwan and North America.

The first phase of the Chiayi Science Park began mass production in June this year, and the third packaging plant of the second phase broke ground in the same month. Both milestones were achieved within thirty days. Almost at the same time, TSMC and packaging giant Amkor signed a ten-year agreement to build two packaging plants in Arizona. Brokerages estimate that TSMC’s revenue share from advanced packaging will exceed 10% for the first time this year, and further increase to over 15% by 2027, becoming the second main axis for company growth after advanced process technology.

The direct driver for this round of expansion comes from the sustained, higher-than-expected demand for AI chips. TSMC's CoWoS capacity will be fully utilized from 2024 to 2026, with orders visible up to 2027. TSMC plans that from 2022 to 2027, CoWoS capacity will have an annual compound growth rate of over 80%, and SoIC capacity over 90%, with nearly doubling speeds each year making large-scale factory construction an inevitable option.

Chiayi Cluster: Accelerating the Formation of the World’s Largest Advanced Packaging Base

The second phase of the Chiayi Science Park covers about 90 hectares, and is planned to introduce emerging industries such as AI, heterogeneous packaging, and quantum technology, with overall development expected to be completed by 2031. TSMC’s third advanced packaging plant in the second phase officially broke ground in June this year; the first and second plants (AP7) in the first phase are currently in the equipment installation stage, with stable mass production expected by 2027.

TSMC stated that there will be a third and fourth plant and further expansion space in the future. Industry sources point out that with the second phase land now in place, it is expected that three more plants or more may be added. The entire first and second phases of Chiayi Science Park are expected to generate annual revenue of NT$313.2 billion and create 9,200 jobs.

On the technology front, equipment suppliers estimate that the initial stage of Chiayi Phase I AP7 will mainly use WMCM (wafer-level multi-chip module) packaging dedicated to Apple, with high-end processes such as SoIC and CoWoS gradually introduced in the future. Geographically, the Chiayi Park and the Hsinchu Fab 22 (2nm mass production base), as well as the Central Taiwan Science Park Fab 25 (A14 advanced process), form a coordinate—at the 2nm and more advanced generations, the value of a single chip is jointly determined by "advanced process + advanced packaging," making the Chiayi cluster a critical node linking the advanced supply chain of southern central Taiwan.

Capacity Expansion: The Supply and Demand Pressures Behind 80% Annual Compound Growth

TSMC currently has advanced packaging plants in six locations across Taiwan: Taoyuan, Hsinchu, Miaoli, Taichung, Tainan, and Chiayi. There are rumors TSMC intends to build a new plant in the Erlin Park of the Central Taiwan Science Park.

Demand-side pressure is clearly apparent. First-tier clients like Nvidia, AMD, Google, AWS continuously advance large-scale AI accelerator designs, keeping TSMC’s advanced packaging capacity running at full load for the long term. With CoWoS and SoIC technologies rapidly entering mass production, packaging is no longer just a back-end process but has become a crucial link in AI chip performance, power consumption, and system integration.

Of the capital expenditures amounting to as much as $56 billion in 2026, TSMC will allocate around 10% to 20% to advanced packaging testing, mask production, and other related projects, corresponding to approximately $5.6 to $11.2 billion. Advanced packaging has thus been upgraded from a “supporting item” in capital expenditure to an independent strategic investment direction.

Arizona Dual Factories: Ten-Year Agreement Anchors US Domestic Capacity

While expanding rapidly in Taiwan, TSMC is anchoring its advanced packaging capacity in North America through its cooperation with Amkor. According to the ten-year partnership agreement, TSMC will utilize Amkor’s advanced packaging and testing services and plan to build two advanced packaging plants in Arizona, with the first plant already applying for a construction permit.

The strategic value of this layout lies in the localization of the supply chain closed loop. With TSMC’s 4nm and 3nm wafer fabs already under construction in Arizona, the addition of packaging capacity allows US customers to complete the entire process from wafer manufacturing to packaging and testing in the same area, greatly reducing cross-border supply chain risks.

Risk disclosure and disclaimerThe market has risks; investment requires caution. This article does not constitute personal investment advice and does not take into account individual users’ specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their particular situation. Investments made accordingly are at your own risk. ```