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The Taiwan Semiconductor Manufacturing Company (TSMC) has entered into a deal with the Arizona based chip packaging testing and services provider Amkor to expand the packaging capabilities of the Arizona fab. TSMC's Arizona foundry is slated to enter mass production next year, and with Q4 2024 underway, the fab is taking the final steps to set up its US semiconductor supply chain. According to the firm, the partnership will focus on TSMC's Integrated Fan Out (InFO) and CoWoS packaging technologies to address customers' needs relying on TSMC Arizona for their semiconductor products.
TSMC Seeks To Accelerate Product Cycle Times In Arizona Through New Deal With Packaging Firm Amkor
Packaging technologies have become quite important in the age of artificial intelligence, and the sizable demand for advanced GPUs has strained their existing capacity. AI demand has also injected fresh life into TSMC's stock and made the firm allocate nearly $30 billion for capital expenditure in 2025 in order to expand chip production and packaging capacity. On the latter front, the firm also acquired a factory last year, which, according to estimates, has enabled it to meet its packaging capacity goals ahead of time.
However, most of TSMC's packaging investments are in Taiwan, where all of the firm's existing leading edge chip fabrication capacity is housed. Consequently, the deal with Amkor announced earlier today expands TSMC's packaging footprint in the US, with the two companies aiming to beef up output by utilizing the proximity of their operations in Arizona.
Arizona has a robust semiconductor supply chain due to Intel's presence. TSMC's Arizona fab has seen additional suppliers move to the state, and TSMC has also won billions of dollars in funding from the Biden Administration's CHIPS and Science Act to build advanced chip manufacturing facilities in America.
As part of its deal with Amkor, TSMC will procure chip packaging and testing facilities from the firm's new facility in Peoria, Arizona. This $2 billion plant has also seen CHIPS funding after the Commerce Department announced $400 million in funds and $200 million in loans for the site in late July. The project is expected to create roughly 2,000 new jobs, and TSMC's deal reflects an uptick in cross-sectional semiconductor fabrication capacity expansion in Arizona that is helped by government incentives.
TSMC aims to accelerate product cycle times by teaming up with Amkor as it leverages the proximity of the Arizona fab and the Peoria facility. The pair will focus on the Taiwanese fab's InFo and CoWoS chip packaging. InFo is used predominantly to package chips for smartphone and mobile applications, while CoWoS is the preferred technology of choice for artificial intelligence GPUs.
The deal comes soon after the government allowed semiconductor facilities aided by Federal subsidies to be exempt from environmental impact assessments. Semiconductor fabrication is a resource-intensive process that requires extensive chemical use to ensure exacting levels of product purity.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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