Taiwanese company’s mega investment signals power shift in AI, chip manufacturing

CNN describes in latest article that Taiwan Semiconductor Manufacturing Company's (TSMC) record-breaking $100 billion investment in the US isn’t just a business move—it’s a game-changer in the fierce global race for AI dominance. As chips power everything from your smartphone to cutting-edge AI servers, this bold expansion promises to reshape the semiconductor landscape and redefine the battle between the world’s tech giants.

The move, which includes building two advanced packaging facilities in Arizona, has attracted global attention and raised some concerns back in Taiwan.

TSMC dominates the semiconductor industry, producing over 90 per cent of the world’s most advanced chips used in smartphones, AI applications, and defense systems. This massive investment reflects the skyrocketing demand for advanced packaging technology—a crucial step in semiconductor manufacturing—driven by the explosive growth of AI worldwide.

At Computex in Taipei last month, Nvidia CEO Jensen Huang highlighted the critical role of advanced packaging in AI, stating, “the importance of advanced packaging for AI is very high,” adding, “no one has pushed advanced packaging harder than me.” Packaging involves encasing a chip and mounting it on a device’s motherboard, but advanced packaging goes further by enabling chips like GPUs, CPUs, and high bandwidth memory to be placed closer together. This proximity boosts performance, speeds up data flow, and reduces energy consumption.

Dan Nystedt, vice president at investment firm TrioOrient, said, “You’re trying to put the chips as close together as possible, and you’re also putting in different solutions to make the connection between the chips very easy.” This technology helps keep Moore’s Law alive, as traditional chip fabrication becomes more complex and costly.

TSMC’s CoWoS (Chips-on-Wafer-on-Substrate) technology, developed over 15 years ago, has surged in popularity amid the AI boom. As AMD’s CEO Lisa Su put it, Taiwan is “the only place that you can say CoWoS and everybody would understand.” Demand for CoWoS has prompted TSMC to rapidly expand production, with Huang noting a quadrupling of capacity in less than two years.

Having both advanced fabrication and packaging in Arizona creates a “one-stop shop” for chip manufacturing in the US, strengthening its AI competitiveness and benefiting major clients like Apple, Nvidia, and Qualcomm, according to analyst Eric Chen.

Producing advanced packaging technologies in the US also reduces supply chain risks currently concentrated in Taiwan. “Instead of having all eggs in one basket, CoWoS would be in Taiwan and also the US, and that makes you feel more safe and secure,” said Nystedt.

While CoWoS faced skepticism initially due to high costs—“I only had one customer … I really became a joke [in the company],” recalled its inventor Chiang Shang-yi—the AI-driven surge has made it indispensable.

Alongside TSMC, other key players in advanced packaging include Samsung, Intel, and OSAT firms such as China’s JCET Group, America’s Amkor, and Taiwan’s ASE Group and SPIL, underscoring the global nature of the semiconductor supply chain.

As tensions between the US and China persist despite a recent temporary tariff truce, TSMC’s investment marks a significant step in the race for AI supremacy and chip manufacturing dominance.

By Naila Huseynova