MediumV Technology Geopolitics & AI27 September 2026, Sunday

Taiwan opens third Chiayi phase as TSMC eyes five more packaging plants

Taiwan's National Science and Technology Council has opened a one-month public consultation on the 198.65-hectare third phase of Chiayi Science Park. According to the Taipei Times on 28 September, TSMC plans to build 5 additional advanced packaging plants there, which would bring its total in the park to 10.

Location: CHIAYI

According to the Taipei Times, TSMC has 2 advanced packaging facilities in the first phase, while 3 more are being built in the second phase with completion targeted for 2031. Advanced packaging is the production stage that combines multiple chips in a single package to boost the performance of AI accelerators. Most of the land for the third phase is leased from Taiwan Sugar Corp, and its focus areas are listed as AI, heterogeneous packaging, silicon photonics and quantum technology. The newspaper wrote that 10 facilities would make the park the world's largest packaging hub.

The demand comes from orders by Nvidia, AMD and Apple for CoWoS packaging, a TSMC technique that places processors and high-bandwidth memory on the same base. TSMC had raised its 2026 capital expenditure forecast from 52–56 billion dollars in April to 60–64 billion dollars. After the public consultation come a feasibility study, Executive Yuan approval and an environmental impact assessment. Sources conflict on when the first-phase facilities will enter mass production: the Taipei Times says June 2026, while BigGo gives 2027.

Talay assessment

Bottom line

The third phase shows that TSMC accepts the bottleneck of the AI era is now packaging as well as chip fabrication, and that it is keeping this capacity in Taiwan. If the 10-plant target is met, the bulk of CoWoS capacity will stay in Taiwan. That means island-centred supply risk will persist despite investment in the United States.

Likely effects

AI chip supplyPositive6 months+
Five additional plants serving CoWoS demand from Nvidia, AMD and Apple could ease the packaging bottleneck in accelerator supply over the medium term.
Taiwan concentration riskNegative6 months+
Concentrating packaging capacity in 10 plants at Chiayi raises the risk that a crisis in the Taiwan Strait would hit global AI supply even harder.
Local planningUncertain1–6 months
The feasibility study, Executive Yuan approval and environmental impact assessment for the 198.65-hectare site could stretch the timetable.

Possibilities, ranked

1
Plan approved, construction after 202765%
The consultation and feasibility study conclude smoothly, and TSMC formally announces its third-phase plants.
Watch: Science and Technology Council submitting its feasibility report to the Executive Yuan
2
Timetable slips30%
The environmental and land processes are delayed, and some plants move to other parks.
Watch: Schedule of environmental impact assessment meetings
3
Plan scaled back5%
AI demand slows and TSMC cuts the number of additional plants below 5.
Watch: Capex guidance in TSMC's quarterly results in October

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Market reaction

Indicators affected

Chiayi Phase III area▲ 198.65 hectares
Additional packaging plants planned▲ 5
TSMC 2026 capex forecast▲ $60–64 billion