According to Taiwan’s official Central News Agency, “the rapid growth of the artificial intelligence (AI) market has driven a surge in demand for TSMC’s advanced packaging.”
TSMC is intensifying its efforts towards AI with its latest plan to invest $2.9 billion in an advanced chip packaging plant in Taiwan. The semiconductor manufacturing company wants to capitalize on the trending AI buzz after recently noting the high demand for AI chips. Earlier in the month, TSMC reported higher sales than expected amid increased demand for AI tools and applications. Bloomberg calculations revealed that the company’s Q2 sales for June were NT$156.4 billion. Meanwhile, analysts’ expectation was NT$476.2 billion. Like TSMC, global chipmakers are looking to take advantage of the AI boom.
TSMC to Invest in Advanced Chip Packaging Plant amid AI Boom
According to Taiwan’s official Central News Agency, “the rapid growth of the artificial intelligence (AI) market has driven a surge in demand for TSMC’s advanced packaging”. The company is responding to the market demand by investing billions of dollars in the plant in Tongluo Science Park, Taiwan. By the side, the investment also creates up to 1,500 local job opportunities. The report added:
“ At present, the management authority has officially issued a letter to approve the land lease application of TSMC Tongluo Science Park, and arranged a land lease briefing.”
Before now, Goldman Sachs analysts raised their target on TSMC to NT$700, signaling their confidence in the company’s future performance. Evelyn Yu and Bruce Lu said they see the semiconductor manufacturer as the “key enabler” among other semi-coverage. The analysts referred to TSMC’s “leadership stance in leading-edge nodes and advanced packaging technology”.
While presenting the Q2 earnings report, C.C. Wei, the CEO of TSMC, spoke about the company’s performance with AI. He revealed that TSMC is recording solid demand for AI and noted that it has no problem in supporting the front-end part. However, the manufacturer is experiencing “some very tight capacity” on the advanced packaging side. Notably, the packaging stage is one of the final steps in semiconductor production. This is when the chips are placed in protective cases, creating connections needed for electronic devices.
Furthermore, fingers are crossed on if chip-related equipment manufacturers will benefit from the TSMC investment in an advanced chip packaging plant in Taiwan. The Central News Agency said the market is optimistic that the likes of Xinyun, Wanrun, and Hongsu will benefit from the operation of equipment factories.
TSMC recorded its first profit decline since 2019 during the second quarter. This is because companies that stockpiled during the pandemic are now struggling with excess processors as customers cut down on electronics expenses.