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TSMC to invest $2.9bn in Taiwanese advanced chip plant

Image credit: TSMC

The world’s largest chipmaker has announced its plans to boost its production capacity to meet the rising demand for artificial intelligence (AI) products.

Taiwanese chip maker TSMC plans to invest nearly T$90bn (£2.4bn) in an advanced packaging facility in the Tongluo Science Park in northern Taiwan. 

“To meet market needs, TSMC is planning to establish an advanced packaging fab,” the company said.

The announcement follows last week’s comments from the company’s CEO, CC Wei, who told analysts that TSMC plans to roughly double its capacity for advanced packaging capacity in 2024 compared with 2023, in order to meet “strong demand” for AI chips from its customers. 

The packaging process for advanced semiconductors uses high-technology processes to place multiple chips into a single device, creating a more powerful computer chip. TSMC has said its chip on wafer on substrate (CoWoS) capacity is “very tight”, and the firm could struggle to meet the boost in demand.

“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 per cent fall in second-quarter profit.

TSMC said the new plant is expected to create 1,500 jobs.

The semiconductors manufactured by TSMC for customers such as Nvidia are the muscle behind generative AI, the technology that powers popular tools like OpenAI’s ChatGPT, which generates text in response to a prompt, including articles, essays, jokes and even poetry.

TSMC holds over 90 per cent of the manufacturing capacity for the world’s leading-edge chips and nearly 50 per cent of the world’s production of chips below 10nm. The company’s high-performance chips are used in everything from smartphones and cars to missiles. TSMC is also Apple’s primary chip supplier. 

Last week, the company delayed the start of production at its Arizona chip plant – currently under construction – until 2025, because of a shortage of skilled workers. The company said it now plans to send Taiwanese technicians to train US workers. 

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