Taiwan breaks ground on TSMC packaging base to relieve CoWoS limits

Taiwanese authorities broke ground Sept. 21, 2026 on the Baipu Industrial Park in Kaohsiung, establishing an advanced packaging base to ease capacity bottlenecks for artificial intelligence processors.

The 88.73-hectare development allocates 53.63 hectares for industrial use, the Kaohsiung City Government said. Around 25 hectares, or roughly 47% of that industrial space, is reserved for back-end semiconductor equipment and materials vendors.

Officials project the site will generate 300 billion New Taiwan dollars ($9.4 billion) in annual output value. The park is planned to create over 4,000 local technical jobs.

The hub addresses severe shortages in Chip-on-Wafer-on-Substrate packaging, known as CoWoS. Advanced packaging combines logic dies and high-bandwidth memory side by side, forming the central manufacturing hurdle for AI hardware.

Taiwan Semiconductor Manufacturing Co. will anchor the dedicated zone. TSMC plans to develop a 3-hectare plot housing two facilities: a technology validation laboratory and a specialized talent-training center.

The validation facility will feature modular lines with clean rooms and test bays, TSMC Vice President Jun He said. The infrastructure allows suppliers to test machinery and materials before shipping tools to high-volume manufacturing fabs.

The on-site platform will shorten engineering iterations and improve packaging validation efficiency by 25% to 50%, He said. TSMC projects its total CoWoS production capacity will grow at an annual compound rate exceeding 80% through 2027.

Customer commitments from Nvidia and Advanced Micro Devices have driven the expansion. Both chip designers rely almost entirely on TSMC for turnkey foundry processing and high-density 2.5D packaging integration.

Taiwan President Lai Ching-te attended the opening event alongside TSMC Co-Chief Operating Officer Y.P. Chin and ASE Technology Holding Chief Executive Tien Wu. The presence of rival outsourcing firms underscores an island-wide effort to align the supply chain.

ASE operates packaging and testing facilities in nearby Renwu. Integrating ASE and TSMC back-end networks aims to prevent tool redundancy and secure intermediate substrate availability across southern Taiwan.

Baipu serves as a junction within Taiwan's southern semiconductor corridor. The zone connects TSMC's 2-nanometer wafer fab in Nanzih with precision materials suppliers located in Qiaotou.

Taiwan's Ministry of Economic Affairs formally approved the industrial zone on March 17, 2026. Local planners selected civil engineering contractors earlier in the month before authorizing earthworks.

More than 20 semiconductor supply-chain vendors attended the ceremony to review industrial plot allocations, according to municipal filings. The municipal administration has already initiated planning for an adjacent phase-two expansion.

The Ministry of Economic Affairs did not disclose the direct capital expenditure figure for TSMC's validation facilities. TSMC has not published a standalone corporate filing regarding the project on its investor relations platform.

Construction of municipal utilities and core road networks will continue through early 2028. TSMC's validation laboratories and training facilities are scheduled to begin formal operations in the fourth quarter of 2029.