Nvidia targets substrate capacity at 2.5 times current levels through supplier expansions
Key Facts
Nvidia aims to increase production capacity for substrates used in its products to 2.5 times current levels over the next three years, according to a company statement on its supply chain expansion. Its agreements with Ibiden, Unimicron and Samsung Electro-Mechanics contribute to that goal. The announcement combines Samsung Electro-Mechanics' participation in the expansion plan with the Ibiden agreement signed and announced earlier this year. The expansions extend to semiconductor testing, advanced packaging and the manufacture of optical engines used in co-packaged optics. "Demand is extraordinary, and capacity is the constraint," Nvidia founder and Chief Executive Jensen Huang said in the expansion announcement.
In Japan, the expansion of Ibiden's Ono plant aims to raise its capacity to 3 times current levels, according to Nvidia's statement. The company is supporting the expansion with a multibillion-dollar capacity reservation payment. The plant's additional capacity is expected to begin ramping up in the first quarter of 2028. In Taiwan, Nvidia expects Unimicron's substrate manufacturing expansion to begin adding production capacity in the second quarter of 2027. The expansion is expected to reach full capacity by mid-2028, as part of suppliers' contribution to increasing capacity available for Nvidia products.
In semiconductor testing, Nvidia expects its total available capacity to double between calendar years 2026 and 2027. The increase is based on expansions in the United States, Taiwan and Singapore, according to its statement. The plan includes a $1.1 billion advance payment from Nvidia to King Yuan Electronics to reserve testing capacity. The payment supports new facilities and testing equipment in the United States, where King Yuan aims to begin volume production in April 2027. In Singapore, the expanded testing operations are expected to begin volume production in February of the same year. In parallel, Nvidia and SPIL are expanding optical engine manufacturing in Taiwan. The companies aim to increase capacity for these engines, used in co-packaged optics, to 15 times current levels by mid-2027.
In advanced packaging, Amkor announced a new $1.3 billion agreement with Nvidia to support further expansions in South Korea. The agreement complements the companies' collaboration in Arizona, according to Amkor's statement on the partnership. It brings the total value of their multiyear agreements in South Korea and Arizona to $3 billion. Nvidia Executive Vice President of Operations Debora Shoquist said "growing demand for accelerated computing is increasing the need for advanced packaging capacity." Amkor had raised its planned investment in the Arizona packaging and testing campus to about $12 billion as part of its second-phase expansion.
The expansion agreements follow Nvidia's quarterly revenue of $96.2 billion in the second quarter of fiscal 2027, according to its earnings statement. Total revenue rose 106% from the corresponding quarter of the previous fiscal year. Data center revenue alone reached $89.0 billion over the same period. That business posted annual growth of 117%. For the third quarter of the same fiscal year, Nvidia expects revenue of $108.0 billion, plus or minus 2%, excluding data center compute revenue from China.
In the nearest scheduled earnings release among the expansion partners mentioned, Amkor will report third-quarter results after the market closes on October 26, 2026, according to its investor announcement. The company will hold an earnings call at 5 p.m. U.S. Eastern time the same day. The expansion schedule for its Arizona campus extends beyond the start of operations for several new capacity additions at Nvidia's other suppliers. Amkor expects construction of the campus's second phase to begin in late 2027. It aims to complete that phase by the end of 2029, according to its investment plan announcement.