Nvidia said it has signed a $1.5 billion advanced-packaging agreement with Amkor Technology, a move to expand its ability to package AI chips in the United States and reduce its reliance on Taiwan Semiconductor Manufacturing Co. for one of the most critical steps in chip production. Amkor’s shares rose more than 12 percent in premarket trading on the news.
The deal is the latest in a series of moves by Nvidia to build a more resilient supply chain. Advanced packaging, the process of assembling multiple chips into a single package, has become the bottleneck of the AI era, and TSMC’s CoWoS packaging lines are the industry’s most in-demand resource. Every AI accelerator of note, including Nvidia’s, has depended on that capacity.
CoWoS, short for chip-on-wafer-on-substrate, is the technique that makes modern AI accelerators possible: it places the computing chip and its memory stacks side by side on a silicon interposer, wiring them together into a single package. The process is slow, expensive, and exacting, which is why supply has been stretched since AI demand took off. TSMC has been expanding its CoWoS capacity aggressively, but every new line has been consumed by orders almost as soon as it comes online.
The agreement with Amkor does not replace TSMC. Nvidia will continue to use CoWoS for the bulk of its packaging, and the Amkor plant in Arizona will complement rather than substitute for it, analysts said. But the deal gives Nvidia a second source for a step of production where it previously had none, and it anchors packaging capacity on American soil.
Amkor, the world’s second-largest outsourced packaging company, has been building out its U.S. footprint. The company’s Arizona facility, announced with Apple as a founding customer, is part of a wave of onshoring that the CHIPS Act subsidies helped trigger. The Nvidia agreement makes Amkor’s U.S. ambitions credible beyond a single anchor tenant.
For Nvidia, the strategic logic runs through the company’s deepening ties to Washington. The chip designer became the most valuable company in the world on the strength of AI demand, and it has been under pressure to show that its supply chain can survive a disruption in Taiwan. Executives have said publicly that the company wants multiple sources for every critical step of production.
The practical constraint is that packaging capacity takes time to build. Analysts noted that the new capacity from Amkor and other suppliers will not meaningfully ease the CoWoS bottleneck before 2027, and that demand for AI accelerators is growing faster than any packaging supplier can add capacity. “The bottleneck is real, and it is not going away this year,” one analyst said. “This deal is about 2027 and beyond.”
The financial terms are modest relative to Nvidia’s scale. The company generated more than $100 billion in revenue in its most recent fiscal year, and $1.5 billion is small against its cash balance. The significance is structural: by committing capital to a second supplier, Nvidia is signaling that it intends to compete for packaging capacity the way it competes for wafers, with long-term commitments rather than spot purchases.
The deal also reflects the changing geography of chip production. The U.S. government has made clear it wants advanced packaging, not just fabrication, on American soil, and the CHIPS Act set aside funding specifically for the sector. Nvidia’s agreement with Amkor gives the administration a marquee example of a company backing onshoring with its own money.
Amkor’s stock reaction showed how much investors wanted the confirmation. The 12 percent premarket jump followed months of speculation that Nvidia would commit to a U.S. packaging partner, and the announcement removed the uncertainty. Amkor’s shares had lagged the broader semiconductor rally this year, and the deal gives the company a growth story it lacked.
There are limits to what the agreement can accomplish. Advanced packaging is a complex, low-yield process that took TSMC years to perfect, and analysts cautioned that new entrants will face learning curves. The most sophisticated packaging, for Nvidia’s highest-end accelerators, will likely remain with TSMC for years to come.
Nvidia is spreading its packaging bets beyond the United States as well. The company has been working with other suppliers in Asia and has said it is investing in the packaging ecosystem across multiple geographies. The Amkor agreement is the first to carry a dollar figure of this size on U.S. soil.
The message to the market is one of insurance rather than urgency. Nvidia’s revenue growth depends on its ability to ship accelerators, and its ability to ship depends on packaging. By paying now for capacity that will not come online for two years, the company is buying itself a hedge, and telling investors it has thought through the constraint that matters most.
