Taiwan Semiconductor Mfg. Co. Ltd. TSM is set to double its production capacity for advanced packaging, a move driven by the increasing demand for artificial intelligence chips from major players like Nvidia Corp. NVDA, Microsoft Corp MSFT, Amazon.com Inc. AMZN, and Alphabet Inc GOOGL GOOG.

What Happened: TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging is experiencing a surge in demand, particularly from AI chip manufacturers and cloud service providers, reported CNA.

TSMC is expected to double its production capacity in 2025, with Nvidia projected to occupy over 50% of the capacity.

Despite TSMC’s efforts to ramp up production, the demand for advanced packaging continues to outstrip supply. The company plans to double its CoWoS production capacity by 2025, according to the report.

Notably, TSMC’s Arizona plant in the U.S. will collaborate with major packaging and testing company Amkor to expand the production of advanced packaging, in response to the increasing demand from AI and AI chip manufacturers.

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Why It Matters: The decision by TSMC to double its CoWoS production capacity comes at a time when Nvidia is making significant strides in the AI sector, recently replacing Intel on the Dow Jones Industrial Average.

This shift underscores Nvidia’s growing influence and the increasing demand for AI technology.

Meanwhile, TSMC has faced challenges, such as disruptions caused by Typhoon Kong-rey, impacting its operations in Taiwan.

Additionally, TSMC’s advancements in 3-nanometer technology have been pivotal, as evidenced by Apple’s recent launch of the M4 Pro and M4 Max chips, further emphasizing the importance of TSMC’s role in the semiconductor industry.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote