Nvidia invests $1.5B in Amkor to secure chip packaging in the US

What happened?

On July 23, 2025, Nvidia announced an agreement with Amkor Technology, one of the leading providers of semiconductor packaging and testing services, to make a $1.5 billion prepayment. This capital will be used to expand Amkor's advanced packaging facilities in Peoria, Arizona. The news caused Amkor's shares to rise approximately 12% after market close, according to The Next Web. This move comes amid growing demand for AI chips and geopolitical tensions that have highlighted the concentration of the supply chain in Taiwan.

Why is it important?

Chip packaging is a critical stage in semiconductor manufacturing, especially for high-performance processors used in artificial intelligence. Nvidia relies on advanced packaging technologies like CoWoS (Chip-on-Wafer-on-Substrate) for its data center GPUs, such as the H100 and Blackwell series. Traditionally, much of this capacity is concentrated in Taiwan, with TSMC as the dominant supplier, posing a significant geopolitical risk due to tensions between China and Taiwan. With this investment, Nvidia secures capacity on US soil, aligning with the CHIPS Act strategy and the reshoring trend of the supply chain. This agreement is not an isolated case: in 2024, Nvidia had already announced a collaboration with Intel for advanced packaging, and in 2023 it invested in TSMC's plant in Arizona. However, the prepayment to Amkor is Nvidia's largest direct financial commitment to a packaging supplier.

Consequences and analysis

For Nvidia, this prepayment guarantees priority access to packaging capacity in the US, reducing dependence on TSMC and other Asian suppliers. According to The Next Web, Amkor was already a supplier to Nvidia, but this agreement deepens the bond and secures future capacity. For Amkor, it provides a financial and credibility boost that will allow it to better compete with giants like ASE Technology, the world's largest packaging supplier based in Taiwan. In the long term, it could accelerate the construction of a more resilient semiconductor supply chain in North America. However, the production scale is still modest compared to TSMC's capacity in Taiwan: the new lines in Arizona are expected to be operational by 2027 and generate hundreds of jobs, but TSMC's total CoWoS capacity in Taiwan far exceeds what Amkor can offer. Additionally, manufacturing costs in the US are higher, which could impact Nvidia's margins in the short term. This move is part of a broader trend: Google, Microsoft, and Amazon have also made similar investments in semiconductor infrastructure. For example, Microsoft invested in Intel's plant in Ohio, and Amazon acquired a stake in a chip factory in Texas. For startups and tech companies that depend on AI chips, this could translate into greater supply and potentially shorter lead times in the medium term, although analysts warn that the packaging bottleneck will not be resolved until 2028.

“Chip packaging is the invisible bottleneck of AI. With this move, Nvidia not only secures supply but sends a clear signal about the need to decentralize production.”

In the broader context, this news reinforces the trend of big tech companies directly investing in semiconductor manufacturing infrastructure. The US CHIPS Act, passed in 2022, allocated $52 billion to boost domestic manufacturing, and this agreement is an example of how private companies complement those efforts. However, some critics point out that the $1.5 billion prepayment is only a fraction of the $40 billion Nvidia spends annually on chip manufacturing, and dependence on Taiwan will remain significant for the most advanced chips. Additionally, Amkor does not manufacture wafers, only packages them, so Nvidia still depends on TSMC and Samsung for wafer fabrication. Therefore, this agreement is an important step but not a complete solution to geopolitical vulnerability.

What you need to know

• The $1.5B prepayment is one of the largest ever made by a customer to a packaging supplier, comparable to previous Apple deals with display suppliers.
• The expansion in Arizona will create hundreds of jobs and strengthen the semiconductor ecosystem in the US, adding to TSMC and Intel's investments in the same state.
• Amkor expects the new production lines to be operational by 2027, meaning the real impact on the supply chain will not be seen for two years.
• The move does not eliminate dependence on Taiwan but significantly reduces it for Nvidia's high-end chips. According to industry estimates, Nvidia could cover up to 20% of its advanced packaging needs with this additional capacity.
• The agreement includes partial exclusivity clauses, ensuring Nvidia will have priority over other Amkor customers at those facilities.