The News
Nvidia is paying six suppliers up front to build more capacity for its AI chips. One deal gives King Yuan Electronics (KYEC) $1.1 billion to build chip testing sites in the US.
“Demand is extraordinary. Capacity is the constraint,” CEO Jensen Huang said.
The six make chip substrates, packaging, testing and optical parts in Japan, South Korea, Taiwan and the US.
The details
Nvidia plans 2.5 times its current substrate capacity within three years, from three suppliers. Substrates are the boards that connect a chip to the rest of a server.
Nvidia is giving Ibiden a multibillion-dollar advance to triple its Ono plant in Japan. The new capacity ramps from Q1 2028.
Unimicron signed a capacity reservation agreement for its Taiwan expansion. New capacity starts in Q2 2027 and reaches full output by mid-2028.
Samsung Electro-Mechanics is adding capacity in South Korea. By 2028, Nvidia expects its orders to fill a significant share of that capacity.
Nvidia expects its chip testing capacity to double from 2026 to 2027. New testing sites are going up in the US, Taiwan and Singapore.
KYEC’s board approved up to $1.4 billion for a US facility in July. Its US testing is set to reach high-volume production in April 2027.
Amkor agreed in July to expand packaging in Arizona as part of a $1.5 billion deal funded partly by an Nvidia prepayment. It now plans to raise its interposer wafer capacity in South Korea by more than 300% by the end of 2028.
SPIL plans to make 15 times as many optical engines in Taiwan by mid-2027.
Nvidia’s supply commitments reached $279 billion as of July 26, up from $119 billion a quarter earlier. Most of that money is for memory and manufacturing facilities.
Nvidia can cancel or reschedule some agreements before it places firm orders, but changes can cost it extra.
My notes
Other substrate buyers get what Nvidia leaves. Nvidia has paid for or reserved new capacity at Ibiden and Unimicron, and it expects a large share of Samsung Electro-Mechanics’ output. Companies that buy substrates from these plants for servers, PCs or network gear compete for the rest.
What’s next
Nvidia’s expanded testing in Singapore reaches high-volume production in February 2027 and KYEC’s US testing in April 2027. New substrate capacity comes from Unimicron in Q2 2027 and Ibiden in Q1 2028.
(Photo: Homa Appliances / Unsplash)
