Nvidia targets substrate capacity of 2.5 times current level through deals with Asian suppliers
Key Facts
Nvidia aims to expand production capacity for substrates used in its products to 2.5 times its current level over the next three years through agreements with Ibiden, Samsung Electro-Mechanics and Unimicron, according to a company statement. The agreements address production constraints cited by Nvidia Chief Executive Jensen Huang, who described demand for the company's products as extraordinary. "Demand is extraordinary, and production capacity is the constraint," Huang said in the statement. Alongside the substrate agreements, Nvidia is making a $1.1 billion advance payment to King Yuan Electronics to secure testing capacity, according to the same statement. The payment supports the construction of new testing facilities in the United States and the equipment they require. The capacity reservations with suppliers thus extend from substrates to semiconductor testing.
The expansions also include optical engine manufacturing in Taiwan, where Nvidia and its partner SPIL aim to raise capacity to 15 times its current level by mid-2027, according to Nvidia's statement. The expansion is dedicated to engines used in co-packaged optics, supporting connectivity needs in large-scale computing infrastructure. The plan includes a further doubling of optical engine capacity by the end of 2028, marking a subsequent phase of expansion at the Taiwanese partner. In South Korea, Nvidia and Amkor aim to increase interposer capacity by more than 300% by the end of 2028, according to Nvidia's statement. The increase at Amkor is intended to support Nvidia's current and future platforms. In Japan, the expansion of Ibiden's Ono plant aims to bring the facility's capacity to 3 times its current level, according to Investing.com.
The supplier capacity expansion plans follow an increase in Nvidia's supply and capacity commitments to $279 billion on July 26, 2026, according to the company's financial disclosure. Those commitments stood at $119 billion in the previous quarter, highlighting the growing scale of supply and capacity the company is committing to. Nvidia reported revenue of $96.2 billion for the quarter ended July 26, 2026. The company classifies that period as the second quarter of fiscal 2027, according to its earnings statement. Revenue rose 106% from the same quarter a year earlier, alongside growth in supply and capacity commitments. On a quarterly basis, revenue increased 18% from the previous quarter, according to the same earnings statement. In the market, Nvidia shares closed the October 21, 2026 session at $221.97, up 2.54%, according to Investing.com data.
The announced volume production schedule for the expanded testing operations begins in Singapore in February 2027, according to Nvidia's expectations in its statement. King Yuan's new facilities in the United States aim to begin volume production in April 2027, following the expected start in Singapore. For substrates, Unimicron's expansion in Taiwan is expected to begin adding production capacity in the second quarter of 2027, according to Investing.com. That places the start of capacity additions at the Taiwanese supplier in the same period in which the U.S. testing facilities aim to enter volume production. Unimicron's expansion is expected to reach full capacity by mid-2028, according to the same source. This schedule sets out the start of Unimicron's capacity additions and their completion date under the agreements through which Nvidia aims to expand substrate supplies for its products.