Nvidia commits $1.5B to Amkor to expand US chip packaging and secure AI supply chain

Nvidia commits $1.5B to Amkor to expand US chip packaging

Nvidia has agreed to give Amkor Technology a $1.5 billion prepayment to expand advanced semiconductor packaging and testing in the United States, tightening a supply relationship that already sits behind its data-centre chips. The agreement, announced on 23 July, pushed Amkor shares up by roughly 12% in after-hours trading. Packaging is the least glamorous stage of chipmaking and, lately, one of the most contested. It is the step where finished silicon is stitched together with memory and interconnects into the dense modules that run AI servers, and demand for that work has run well ahead of the capacity to do it. The constraint is not abstract. Shortages of advanced packaging, rather than raw wafer fabrication, have at times been the factor limiting how many AI accelerators Nvidia can ship. That makes locking in the capacity a strategic priority rather than a procurement footnote. Nvidia has spent the past year turning scarce inputs into guaranteed ones. A warrant-backed deal with Corning brought new US plants and thousands of jobs into its orbit, and it recently locked in SK Hynix for HBM4 memory. The Amkor prepayment applies the same logic to the back end of the production line. Under the arrangement, the money will fund the expansion of Amkor's operations in Arizona, where the company is already building a $2 billion packaging and test facility in Peoria. The prepayment is not an equity stake. It is cash committed upfront against future capacity, a structure that lets Amkor build ahead of demand it might otherwise hesitate to fund alone. Nvidia has increasingly used its balance sheet this way, spreading prepayments, warrants, and direct commitments across suppliers to secure the inputs its roadmap depends on. The two companies said they would jointly develop packaging and test technologies for what they described as next-generation AI and accelerated-computing platforms. That work includes high-density interconnects and heterogeneous integration, the practice of combining different types of silicon, logic, memory, and more, inside a single package. "AI is driving a generational shift in technology, transforming every industry and creating a unique opportunity to reinvigorate American manufacturing and supply chains," said Debora Shoquist, Nvidia's executive vice-president of operations. Kevin Engel, Amkor's chief executive, said the partnership "underscores the central role advanced packaging plays" in the future of AI. The deal lands on top of an already crowded year for Amkor. The company packages chips for both Nvidia and AMD, and in June signed a 10-year agreement with TSMC for advanced packaging in Arizona. It has supplied packaging for Nvidia's data-centre processors for some time, so the new commitment widens existing work rather than starting it. That run of deals has turned a once-obscure outsourced assembler into one of the more sought-after names in the American chip build-out. Both sides framed the expansion as a hedge as much as a capacity play. Concentrating packaging in a handful of Asian sites has long been a single point of failure for the industry, and a domestic alternative is meant to give the AI supply chain more geographic resilience. The Arizona expansion fits a broader onshoring push. Amkor's Peoria plant was awarded $407 million under the CHIPS and Science Act, and it sits close to TSMC's Arizona fabs, whose wafers it is well placed to package without shipping them back to Asia first. Keeping fabrication and packaging within the same state closes one of the last gaps in a domestic supply chain that policymakers have spent years and billions trying to assemble. Most advanced packaging capacity still sits in Asia, and reproducing it in the US is slower and dearer. Nvidia's suppliers have been moving regardless, from a Texas factory assembling Grace Blackwell systems to a run of domestic commitments announced since the start of the year. Neither company disclosed a timeline, or how much fresh capacity $1.5 billion actually buys. Amkor's share price suggests investors were not inclined to wait for the details.

NVIDIA commits $1.5 billion to expand next-gen chip packaging capacity

NVIDIA is partnering with semiconductor packaging company Amkor Technology to develop advanced packaging and testing technologies for next-generation AI and accelerated computing systems, while helping expand Amkor's US capacity in Arizona. The multi-year partnership will align the companies' technology roadmaps around advanced packaging methods, including high-density interconnects and heterogeneous integration. NVIDIA will also provide a prepayment to support the expansion of Amkor's US advanced packaging capacity. The deal comes as increasingly powerful computing systems push chipmakers to find new ways to combine processors, memory and other components while keeping power consumption and data-transfer bottlenecks under control. Advanced packaging has become a critical part of this effort. Instead of relying only on making individual chips smaller, manufacturers can combine different types of silicon and components in a single package. This can improve performance and energy efficiency while allowing specialized chips to work together more closely. The NVIDIA-Amkor partnership will focus on bringing these technologies to market at scale as demand for AI infrastructure grows. Amkor already provides advanced packaging solutions for NVIDIA products, including data center processors, networking chipsets and accelerated computing systems. The companies now plan to expand that relationship by developing new packaging and testing capabilities designed for future computing platforms. For NVIDIA, the partnership also helps secure access to advanced packaging capacity as its hardware portfolio grows. For Amkor, it strengthens its position as a key supplier supporting the increasingly complex systems behind modern data centers. "AI is driving a generational shift in technology, transforming every industry and creating a unique opportunity to reinvigorate American manufacturing and supply chains," said Debora Shoquist, Executive Vice President of Operations at NVIDIA. "Amkor's global capabilities, combined with their committed investment in the United States, are critical components of building resilient AI infrastructure and accelerating next-generation technologies." The partnership also has a geographic dimension. Amkor plans to expand its advanced packaging operations in Arizona, adding US capacity to its existing manufacturing footprint across Asia. That expansion is aimed at building a more geographically diverse supply chain for advanced packaging and testing. These services are increasingly important to the semiconductor industry but have historically been concentrated in parts of Asia. The engineering challenge is becoming more complex as computing systems increasingly rely on multiple types of chips working together. Heterogeneous integration allows components built using different technologies to be combined into one system. High-density interconnects, meanwhile, help move data between those components at high speeds. Both approaches are becoming important as AI workloads demand greater computing performance and faster communication between processors and memory. By developing packaging and testing technologies alongside capacity in the US, NVIDIA and Amkor are targeting both sides of the challenge: building more capable systems while creating a supply chain that can support them. "This strategic partnership with NVIDIA underscores the central role advanced packaging plays in enabling the future of AI," said Kevin Engel, chief executive officer of Amkor Technology. "Our agreement with NVIDIA accelerates our long-term roadmap and supports our ability to deliver full turnkey advanced packaging and test solutions, leveraging our global footprint while expanding U.S. capabilities to support critical AI infrastructure." The collaboration will span the United States and Asia, linking technology development with manufacturing capacity as AI computing platforms continue to evolve. The partnership highlights a broader shift in the semiconductor industry, where advanced packaging is becoming as important to system performance as the chips themselves.

Nvidia, Amkor strike $1.5 billion chip packaging deal

Under the agreement, Nvidia will make a prepayment to support the expansion of Amkor's ⁠US advanced packaging operations, including capacity in Arizona. Amkor Technology said on Thursday it had entered a multi-year agreement with Nvidia worth $1.5 billion to expand advanced semiconductor packaging and test capacity in the US, as the chip industry races ⁠to build ⁠out AI infrastructure. Shares of the semiconductor packaging company jumped 17% in extended trading. Under the agreement, Nvidia will make a prepayment to support the expansion of Amkor's ⁠US advanced packaging operations, including capacity in Arizona. The companies will jointly develop ⁠packaging and testing technologies for Nvidia's AI and accelerated-computing platforms, focusing on combining different types of chips in a single package. Amkor already supplies advanced packaging for Nvidia's product portfolio, including data center processors, and the expanded deal aims to bring new packaging technologies to market as AI infrastructure demand grows. In ⁠June, Amkor entered a 10-year partnership with TSMC, the world's largest contract chipmaker, to enhance semiconductor packaging capabilities in the United States. Amkor is also working with Advanced Micro Devices to package the semiconductor company's chips.