Nvidia and its supply chain partners expand production capacity, planning to increase substrate capacity by 2.5 times over the next three years

NVIDIA announced it has signed large-scale capacity expansion agreements with multiple core suppliers, covering key areas such as substrates, advanced packaging, semiconductor testing, and optical engines, to address the explosive growth in AI computing power demand.

These agreements involve six suppliers: Amkor, IBIDEN, KYEC, Samsung Electro-Mechanics, SPIL, and Unimicron. Among them, NVIDIA has provided KYEC with a $1.1 billion capacity reservation prepayment to support its new testing facility in the United States; IBIDEN's expansion plans are also backed by billions of dollars in prepayments from NVIDIA. NVIDIA CEO Jensen Huang stated at the GTC Berlin conference:

"We are in the midst of the largest wave of infrastructure construction in human history. Demand is extraordinary, and capacity is the bottleneck."

These expansion plans span multiple manufacturing centers in Japan, South Korea, the United States, and Singapore, aiming to enhance the resilience and redundancy of NVIDIA's global supply chain. For the market, the concentrated disclosure of these capacity commitments signals that supply constraints for AI accelerated computing hardware may be significantly alleviated between 2027 and 2028, providing clear mid- to long-term business support for NVIDIA and related supply chain companies.

Substrates are the core focus of NVIDIA's supply chain deployment. The three agreements cumulatively aim to boost related capacity by 2.5 times over the next three years.

Under previously announced agreement frameworks, NVIDIA has provided IBIDEN with billions of dollars in capacity reservation prepayments to support the expansion of its Ono, Japan factory, with a goal to triple the plant's capacity. The new capacity is expected to begin ramp-up in Q1 2028.

Samsung Electro-Mechanics is a new addition to NVIDIA’s supplier network in this round. Its existing Korea facilities can immediately provide incremental capacity, while upgrades and new factories in Sejong and Busan will be pursued. By 2028, the capacity allocated by Samsung Electro-Mechanics to NVIDIA is anticipated to represent a substantial proportion of its annual packaging substrate capacity.

Additionally, NVIDIA is supporting Unimicron’s KF substrate manufacturing expansion in Taiwan with a capacity reservation agreement. The new capacity is expected to be rolled out in Q2 2027 and reach full production by mid-2028.

In advanced packaging, NVIDIA and Amkor plan to expand the interposer wafer capacity in Korea, targeting more than a 300% capacity increase by the end of 2028, along with Amkor’s construction of new manufacturing facilities in Korea, in order to provide greater production scale support for NVIDIA’s current and next-generation platforms.

NVIDIA expects its total semiconductor testing capacity to double from 2026 to 2027, with expansion locations including the United States, Taiwan, and Singapore.

The $1.1 billion capacity reservation prepayment to KYEC will be dedicated to supporting the construction and equipment purchase for its new testing facility in the United States, aiming to begin mass production in April 2027. In Singapore, testing business expansion is anticipated to enter mass production in February 2027.

In response to the rapidly increasing interconnect demands of large-scale computing infrastructure, NVIDIA and SPIL plan to expand optical engine manufacturing capacity for Co-Packaged Optics in Taiwan. The expansion aims for a 15-fold capacity increase by mid-2027 and another doubling by the end of 2028, in line with NVIDIA’s strategic roadmap for next-generation interconnect technologies.