Via restofworld.org
The world's largest chipmaker may be converting old display factories into advanced AI chip packaging facilities, continuing a strategy it kicked off in 2024.
Taiwan Semiconductor Manufacturing Company is reportedly in advanced talks to acquire two unused panel plants from AU Optronics for more than NT$30 billion, roughly $930 million. The facilities sit in the Central Taiwan Science Park, conveniently next door to TSMC’s existing Fab 15 complex.
Both companies have declined to comment on the rumors. But reports indicate TSMC personnel have already conducted on-site audits of the two plants, suggesting this is well past the “just kicking the tires” phase.
What TSMC wants and why it matters #
The two plants in question are AUO’s L7, a Gen 7.5 facility, and L5C, a Gen 5 facility. Neither is currently in active production for AUO, which makes them prime real estate for a buyer with deep pockets and an urgent need for more manufacturing space.
TSMC doesn’t want these plants to make display panels. It wants them for advanced packaging, specifically technologies called fan-out panel-level packaging (FOPLP) and chip-on-panel-on-substrate (CoPoS). These newer methods use larger rectangular panel substrates instead of traditional round silicon wafers. Bigger surface area means more chips processed per run, which means better efficiency and lower costs per unit.
The proximity to Fab 15 is no accident. Having advanced packaging facilities adjacent to a major fabrication complex reduces logistics complexity and could speed up production timelines.
A playbook TSMC has used before #
This wouldn’t be TSMC’s first time buying a display maker’s factory and repurposing it for chip packaging. In August 2024, the company acquired an Innolux plant in Tainan, in southern Taiwan, for NT$17.14 billion. That purchase was aimed specifically at boosting CoWoS advanced packaging capacity.
The current rumored deal, at over NT$30 billion, would be nearly double the price of the Innolux acquisition. The higher price tag likely reflects the fact that TSMC is targeting two facilities this time rather than one.
The AI packaging bottleneck #
FOPLP and CoPoS represent the next evolution of packaging technology. By moving from circular wafers to rectangular panels, TSMC could significantly increase throughput. Panel-based approaches reduce wasted substrate area, since rectangles tile together without the edge waste inherent in circular wafers.
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