Nvidia Reserves $1.1 Billion to Expand Chip Testing, Targets Production in 2027

Key Facts

On October 21, 2026, Nvidia announced agreements with six partners to expand manufacturing capacity across substrates, advanced packaging, semiconductor testing and optical engines, in response to demand for accelerated computing and AI factory platforms. The company is providing King Yuan Electronics with a $1.1 billion advance reservation payment to support new testing facilities and equipment in the United States. The plan targets the start of mass production there in April 2027. Nvidia said the expansion includes its partners Amkor, Ibiden, King Yuan, Samsung Electro-Mechanics, Siliconware Precision Industries and Unimicron. The announced timelines range from the start of testing additions in 2027 to higher capacity targets for substrates, packaging and optics by 2028.

For substrates, Nvidia aims to increase capacity dedicated to its products to 2.5 times its current level over the next three years, through agreements with Ibiden, Samsung Electro-Mechanics and Unimicron. Ibiden plans to raise capacity at its Ono plant in Japan to three times its current level, with additional capacity beginning to ramp in the first quarter of 2028. The expansion is supported by a multibillion-dollar advance reservation payment from Nvidia, according to the company. Unimicron expects to begin adding “KF” substrate manufacturing capacity in Taiwan during the second quarter of 2027, reaching full capacity by mid-2028. Samsung Electro-Mechanics is adding Nvidia-dedicated production to its existing operations in South Korea, while upgrading facilities and building plants in Sejong and Busan. Nvidia expects production dedicated to its products to represent a significant portion of Samsung’s annual substrate capacity by 2028.

Also in South Korea, Nvidia and Amkor aim to increase chip-on-wafer capacity by more than 300% by the end of 2028. The target specifically concerns chip-on-wafer capacity, a measure within advanced packaging operations, and not total packaging capacity. Amkor said an additional $1.3 billion agreement supports its expansion in South Korea. With this commitment, the value of its multiyear agreements with Nvidia in Arizona and South Korea reaches $3 billion. Amkor is scheduled to showcase its advanced packaging and testing capabilities at Nvidia’s “GTC” conference in Washington between November 30 and December 3, 2026. The new agreement places the South Korean expansion within a broader manufacturing partnership that also extends to Arizona.

In testing, Nvidia aims to double total semiconductor testing capacity between calendar years 2026 and 2027, with expansions in the United States, Taiwan and Singapore. Under King Yuan’s plan, the new facilities and equipment in the United States are targeted to begin mass production in April 2027, following the $1.1 billion advance reservation payment. In Singapore, mass production at expanded testing operations is expected to begin in February 2027. The two dates place the testing additions among the early stages of the announced 2027 expansion schedule. In Taiwan, the capacity increase falls under the substrate plan, which Unimicron expects to begin in the second quarter of the same year. The dates remain stated targets for future production.

In optics, Nvidia and SPIL aim to increase optical engine manufacturing capacity in Taiwan to 15 times its current level by mid-2027, then double it again by the end of 2028. These engines are used in co-packaged optics. This path adds a target running from 2027 to 2028 to the expansions in substrates, testing and chip-on-wafer capacity. The announced additions are thus spread across different stages of the data center infrastructure systems manufacturing chain. The plan covers testing capacity, substrates, advanced packaging and optical engines, with timelines varying by partner and location. These dates show that implementation spans more than one calendar year.

The expansion announcement comes as Nvidia’s filings with the U.S. Securities and Exchange Commission showed supply and capacity obligations rising to $279 billion on July 26, 2026, from $119 billion in the previous quarter. The obligations include data center infrastructure systems, particularly memory and manufacturing facilities. Scheduled obligations totaled $92 billion for the rest of fiscal 2027, $87 billion in fiscal 2028 and $88 billion in fiscal 2029. Some supplier agreements allow them to be terminated, rescheduled or amended before firm orders are issued, and changes may lead to additional costs. These figures therefore include obligations with varying degrees of flexibility, including agreements that have not yet become final purchase orders. This provides financial context for the scale of capacity and supply the company is working to secure.

Nvidia’s data center revenue was $89.0 billion in the second quarter of fiscal 2027, up 117% year over year and 18% quarter over quarter. The company forecast revenue of $108.0 billion, plus or minus 2%, in the third quarter of fiscal 2027, excluding data center computing revenue in China. The Associated Press put analysts’ forecast for the quarter spanning August to October 2026 at $104.86 billion, compared with the company’s guidance of about $108 billion. Chief Financial Officer Colette Kress said customer forecasts pointed to revenue growth of about 70% in the fiscal year ending in January 2028. She added that growth would have approached a doubling if not for the difficulty of securing enough supply to produce chips. The comments link demand forecasts with the constraints supplier plans are seeking to address.

Chief Executive Jensen Huang told analysts that the supply chain covered 70% of demand, adding: “Our demand is much higher than that.” Nvidia shares rose 4.1% in after-hours trading following the earnings call, after ending the regular session down 1.6%, according to the Associated Press. The company had announced the expansion plans on October 21, while its shares closed at $216.47 on October 20 and $221.97 on October 21. The stock then closed at $212.21 on October 22 and $210.96 on October 23. These daily closes alone do not establish the effect of the supplier announcement on the share price, and the after-hours gain followed the earnings call. At the next stop, Amkor plans to showcase its advanced packaging and testing capabilities at the “GTC” conference in Washington between November 30 and December 3, 2026.