TSMC’s new plant in the northern county of Miaoli would generate roughly 1500 jobs. Credit: Ascannio via Shutterstock.

Taiwan Semiconductor Manufacturing Company (TSMC) is planning to invest around T$90bn ($2.88bn) to set up a chip packaging unit in Taiwan, reported Reuters.

The investment is aimed at helping TSMC cater to the surge in demand driven by the artificial intelligence (AI) boom.

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“To meet market needs, TSMC is planning to establish an advanced packaging fab in the Tongluo Science Park,” the chipmaker was quoted as saying.

Last week, TSMC CEO CC Wei said the business will nearly double its capacity for advanced packaging to meet growing customer demand.

The news comes after the company reported a 23% drop in net profit in its second quarter in comparison with the year-ago quarter due to lower revenue and margins.

Following the result announcement, Wei stated that the capacity for advanced packaging, particularly TSMC’s chip on wafer on substrate (CoWoS), is “very tight.”

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“We are increasing our capacity as quickly as possible. We expect this tightening will be released next year, probably towards the end of next year,” the company’s chief added.

According to the firm, the Tongluo Science Park management has formally approved TSMC’s request to lease land.

It added that the new plant in the northern county of Miaoli would generate roughly 1,500 jobs.

Even though TSMC is expanding internationally, it intends to retain its most cutting-edge semiconductor technology in Taiwan.

The company is in talks with the German government for subsidies for its plant there.

Japan has already agreed to provide JPY400bn ($2.8bn) in support to TSMC to help in the building of a facility in Kumamoto Prefecture.