Surging demand for artificial intelligence is keeping chip back-end firms busy, including those that handle semiconductor packaging and testing. In Taiwan, home to four of the world's 10 largest back-end chipmakers, capacity expansion is booming, with investment planned for this year topping 20 trillion won ($14 billion).
Taiwan's Economic Daily reported on the 23rd that combined capital spending plans by five major back-end firms — ASE Holdings, PTI, KYEC, Sigurd and ChipMOS — for capacity expansion surpassed NT$460 billion (about 20 trillion won).
ASE led the expansion push, accounting for about 70% of the five firms' total investment plans. ASE raised its investment for the year twice, to $10.5 billion from an initial $7 billion. It marks the first time ASE's investment has topped $10 billion. Of its full-year plan, about $4 billion will go toward new plant construction and infrastructure, and $6.5 billion toward production equipment. ASE is currently pursuing 13 new construction projects and eight renovation projects at the same time. "We have visibility not only for this year but also for next year's demand," said ASE Chief Operating Officer Wu Tien-yu, explaining that strong demand for existing products, along with a simultaneous influx of new products, new projects and additional process steps, left the company with no choice but to sharply expand investment once again.
PTI, a firm specializing in memory and advanced packaging, also sharply increased its investment. It raised its capital spending ceiling for the year by 25%, to NT$50 billion from about NT$40 billion. "We are optimistic that revenue, utilization rates and margins will rise each quarter this year," PTI said, adding that AI-driven demand is being reflected in orders and investment decisions.
ChipMOS, which specializes in display driver ICs and memory packaging, decided to raise its capital spending to more than 25% of revenue this year, up from about 20% in past years. Investment of more than 25% is also expected next year.
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Investment by firms specializing in testing is also expanding rapidly. KYEC had planned capital spending of about NT$39.3 billion this year but raised it by 27% to NT$50 billion as demand for high-performance chip testing continued to grow. Sigurd increased its annual capital spending for the year to NT$8.8 billion from NT$5.9 billion this past May, and estimated its group-wide investment would reach NT$18.6 billion. Then, in late July, its subsidiary Sigurd Yanze added another NT$2 billion to buy equipment for new projects and upgrade clean rooms. Based on the latest investment progress, the group's total capital spending is approaching more than NT$20 billion.
Advanced packaging for AI chips has been cited as a key bottleneck in the AI supply chain. At a shareholders' meeting in June, TSMC Chairman C.C. Wei said this year's planned output of AI accelerator chips using the company's advanced packaging technology, Chip on Wafer on Substrate (CoWoS), had sold out. Lead times for CoWoS currently run 52 to 78 weeks, meaning an order placed now would not be filled until after mid-2028. Amid the flood of back-end orders, TSMC is reported to have made the unusual decision to outsource part of its advanced chip packaging back-end work to rival Intel.
