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TSMC Expands Advanced Packaging Footprint: Supply chain sources reveal that TSMC plans to build five additional advanced packaging facilities (codenamed AP7) in Phase II of the Chiayi Science Park. Once fully completed, the Chiayi site will host a total of 10 packaging and testing plants. The first two phases, P1 and P2, are targeted for mass production in 2027, focusing on heterogeneous integration for cutting-edge nodes such as 2nm to serve AI GPUs, HPC and high-end ASICs.
Jiwei Exclusive In-depth Report: Tower, a leader in silicon photonics foundry services, plans to invest USD 4 billion to build its largest optical communication chip manufacturing base in Japan. The Japanese site targets a monthly capacity of 45,000 300mm equivalent wafers, approximately 40 times its 2025 capacity. The company will also deploy CPO technology at the Toyama factory to compete directly against TSMC’s COUPE platform.
NVIDIA Accelerates Glass Substrate Rollout: Partnering with German equipment vendor SCHMID and other firms, NVIDIA has urged substrate manufacturers in South Korea and Japan to complete development within two years, aiming to adopt the technology in next-generation GPUs by 2028. Demand for upstream advanced packaging materials and equipment (TGV, laser processing, substrates) will advance ahead of schedule.
Critical Validation Window for Memory Sector Nears: Micron will release its FY2026 Q4 earnings after the US market closes on Wednesday, September 30. Solidigm, a subsidiary of SK Hynix, is preparing for a US IPO as early as next year with a valuation of up to approximately USD 150 billion.
The A-share market will enter the final three trading sessions before the long holiday starting September 28 (market closed Oct 1–7), with share lock-up expiration value exceeding RMB 100 billion during this period. Order momentum and capacity expansion for AI hardware including liquid cooling and optical modules remain robust.
In-depth Analysis
Exclusive report by Jiwei: Tower Semiconductor will invest over JPY 600 billion (approximately USD 4 billion, with maximum subsidies of around JPY 160 billion from Japan’s Ministry of Economy, Trade and Industry) to build its largest optical communication semiconductor manufacturing hub in Japan. The Niigata Arai factory (formerly Fab 6) will be retrofitted into a 300mm silicon photonics and advanced optical packaging platform, while 300mm capacity at Toyama Fab 7 will be maximized. New capacity from the two fabs is scheduled to be ready for mass production in Q4 2027, supporting projected revenue of approximately USD 3.6 billion and net profit of USD 1.2 billion for FY2028. Phase-II greenfield facilities will start contributing revenue from 2029; the target monthly capacity in Japan will reach 45,000 300mm-equivalent wafers.
The company’s annualized silicon photonics revenue hit USD 680 million in Q2, representing a YoY increase of roughly 278%. Long-term silicon photonics wafer contracts worth USD 1.3 billion have been secured for 2027 capacity. Tower holds over 80% market share in server optical communications chip foundry services, with customers including NVIDIA and Marvell. LightCounting forecasts the global silicon photonics chip market to grow from USD 4 billion in 2025 to USD 15 billion by 2031, while sales of optical modules, AOCs, NPO and CPO will approach USD 80 billion in 2031.
On the A-share front: Huilv Ecology plans to invest RMB 309 million to construct a R&D and production base for Junheng Technology, adding a new production line with an annual output of 2 million high-speed optical modules (totaling 3.5 million units per annum for the Wuhan site). Shanghai Electric Power Co., Ltd. (Hudian Co.) will contribute RMB 20 million to set up an industrial fund, with indirect investment in Lankun Micro, an OIO optical interconnect chip developer.
Advanced Packaging & Testing：Key themes remain TSMC’s planned AP7 new fab in Chiayi (for heterogeneous integration of 2nm nodes, targeting AI GPUs, HPC and ASICs) and NVIDIA’s glass substrate initiative (partnering with SCHMID for rollout in next-gen GPUs by 2028). No new updates on the mass-production timeline of domestic glass substrates today; progress for BOE and W-Optics was previously disclosed. There are no major new developments regarding domestic substitution of ABF films and IC substrates (constrained supply from Ajinomoto, capacity expansion for CBF/NBF/GBF). Capacity at major substrate vendors such as Unimicron and supply of electronic-grade fiberglass cloth warrant continued monitoring.
SiC / Power Semiconductors: No major new updates today. Prior themes remain intact: Infineon, TI, STMicroelectronics and onsemi have implemented multiple rounds of price hikes. Taiwanese players including Lite-On Power Semiconductor and Taiwan Semiconductor plan another 10%–15% spot price increase in October. The price of domestically produced 8-inch SiC substrates stands at approximately twice that of 6-inch counterparts, with substantial ramp-up of 8-inch epitaxy at Han Dynasty Semiconductor. Jiwei’s report on “further price increases for mature-node foundry services in 2027” indicates sustained pricing strength for power devices, PMICs and MCUs amid AI-driven capacity crowding-out.
Memory & Compute Chips: Solidigm, the NAND and enterprise SSD subsidiary of SK Hynix, aims to launch a US IPO as early as next year with a target valuation up to USD 150 billion. Micron will release its FY26 Q4 earnings after market close on September 30, serving as a critical window to assess the industry momentum of DRAM, HBM and AI data center supply chains. The existing capacity expansion and mass production roadmap for ChangXin Memory Technologies and Yangtze Memory Technologies remains unchanged.
Equipment & Materials: Xianfeng Jingke disclosed that its outstanding orders in H1 rose 80% YoY and hit an all-time high, confirming rising demand for etch and thin-film deposition equipment components. Ceramic heaters are expected to enter small-batch mass production in Q4. Persons acting in concert with the controlling shareholder of Zhongke Feice plan to reduce holdings by no more than 1 million shares (0.28% of total share capital).
Wafer Fabrication: TSMC has confirmed wafer-out price increases of roughly 3%–6% by technology node effective January 2027, with steeper hikes for 2nm and 3nm. 8-inch fab utilization exceeds 100%, sub-45nm nodes are fully loaded, and order visibility extends to 2030. Mature-node foundry pricing is set to rise again in 2027. UMC and Powerchip benefit from spillover orders, and foundry pricing power continues shifting toward suppliers.
Policy & Macro Environment: China and the US reached consensus on eight outcomes and agreed to establish an artificial intelligence dialogue mechanism. Apple and Qualcomm renewed their global patent licensing agreement (effective April 1, 2027). Qualcomm’s market value surged by approximately USD 60 billion overnight, with its share price climbing nearly 4%.
A-share markets will be closed from October 1 to 7. Southbound and Northbound capital flows will be suspended during Oct 1–7; short-term liquidity disruption is limited. Attention should be paid to the heavy share lock-up expiration and pre-holiday trading contraction between September 28 and 30.
Daily Investment Tips
1. Memory: Micron’s FY26 Q4 earnings report (Sep 30), together with its shipment and pricing guidance for HBM4, will serve as the most direct validation of the current AI memory upcycle. Should guidance fall short of expectations, volatility in memory stocks trading at elevated levels may intensify in the short run.
2. Advanced Packaging / Glass Substrates: NVIDIA’s 2028 mass production target, paired with TSMC’s capacity expansion at the new Chiayi fab, creates definite benefits for TGV equipment, laser processing, substrates and thermal materials. However, glass substrate yield and mass-production timelines have repeatedly encountered setbacks historically, so investors need to watch out for pullback risks for this thematic trade.
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