Taiwan Semiconductor Manufacturing Co. (TSMC) is expanding its advanced-packaging footprint in Kaohsiung, planning a new facility at Baipu Industrial Park as artificial intelligence drives unprecedented demand for high-performance chips.
The company plans to develop a 3-hectare site featuring two flexible buildings, small cleanrooms and laboratories for advanced-packaging testing, joint development and process research, TSMC Vice President of Advanced Packaging Technology and Service Jun He said at a 3D IC summit in Taipei.
The project is being developed with Taiwan’s Ministry of Economic Affairs and the Kaohsiung City Government and is designed to strengthen the ecosystem supporting TSMC’s advanced semiconductor manufacturing operations.
TSMC expects testing to become 25%–50% faster
One of the biggest goals is to accelerate the testing and validation of semiconductor equipment and materials.
TSMC says the new setup could improve validation efficiency by 25% to 50%, allowing equipment suppliers and materials companies to test technologies before they are introduced into full-scale production.
The planned site will include laboratories and cleanrooms as well as facilities for joint development and training.
The buildings will use modular designs that can be reconfigured as semiconductor technology changes, giving the site greater flexibility as new generations of packaging emerge.
AI is driving the next semiconductor bottleneck
The expansion comes as the AI boom pushes chipmakers beyond traditional transistor scaling.
Advanced packaging has become increasingly important because it allows multiple chips and components to be integrated into high-performance systems while improving bandwidth and efficiency.
TSMC expects its CoWoS advanced-packaging capacity to grow at a compound annual rate of more than 80% through 2027, with strong demand expected to continue through 2029.
CoWoS, or Chip-on-Wafer-on-Substrate, is particularly important for AI accelerators and high-performance computing systems.
The technology is increasingly critical because AI processors require massive amounts of high-bandwidth communication between computing and memory components.
Kaohsiung is becoming a bigger semiconductor hub
The Baipu project is part of Taiwan’s broader effort to strengthen its semiconductor ecosystem in southern Taiwan.
Taiwan’s Ministry of Economic Affairs said Baipu is being positioned as a hub for advanced-packaging materials and equipment, with research, testing and validation facilities intended to strengthen supply-chain resilience.
The planned park covers about 88.73 hectares, with roughly 53.63 hectares designated for industrial use. Officials say the project will also encourage international companies and local traditional manufacturers to enter the semiconductor equipment and materials supply chain.
That could give smaller Taiwanese suppliers greater access to TSMC’s ecosystem and help them develop technologies for global semiconductor customers.
Taiwan’s semiconductor industry is riding an AI supercycle
The announcement comes as SEMICON Taiwan 2026 highlights the enormous investment wave surrounding AI chips.
SEMI expects global 300mm semiconductor manufacturing equipment spending to exceed US$150 billion in 2027, driven largely by AI demand and continued investment in advanced semiconductor capacity.
SEMICON Taiwan is also placing major emphasis on advanced packaging, chiplets, silicon photonics and smart manufacturing, reflecting the industry’s shift toward system-level integration rather than simply making transistors smaller.
The scale of the event itself underscores the momentum: organizers expect more than 1,300 exhibitors, 4,300 booths and 100,000 professionals from around the world.
Taiwan’s chip industry expects another huge year
Taiwan Semiconductor Industry Association president Wu Chih-i said Taiwan’s semiconductor industry revenue could approach US$300 billion this year, representing more than 40% growth from last year, driven by AI-related demand.
But Wu also warned that energy supplies, talent and cybersecurity are becoming increasingly important challenges for the industry.
Taiwan President Lai Ching-te has similarly emphasized that Taiwan’s semiconductor strength depends on its highly integrated industrial ecosystem and international partnerships. TSMC is simultaneously expanding overseas, including its planned US$265 billion semiconductor investment in Arizona.
That means Taiwan is trying to accomplish two things at once: expand semiconductor production overseas while strengthening the advanced technology ecosystem at home.
Why this matters for the global AI race
The battle for AI dominance is no longer just about who designs the fastest processor.
It increasingly depends on who can manufacture, package, test and connect enormous numbers of chips quickly enough to meet exploding demand.
TSMC’s Baipu project could therefore become an important piece of Taiwan’s strategy to maintain its lead in advanced semiconductor manufacturing while giving suppliers and engineers faster access to the technologies needed for the next generation of AI hardware.
As AI demand pushes advanced packaging capacity toward explosive growth, the question is becoming bigger than TSMC: Can Taiwan build enough packaging, talent and supply-chain capacity to keep up with the world’s AI appetite?
WWC ONE MEDIA J.M.D
Leave a Reply