Amkor and NVIDIA expand AI chip packaging partnership with South Korea agreement

Overview

Updated Oct 22

AI chips aren't finished at the foundry. They are mounted with memory onto a base called an interposer and tested in a back-end step, advanced packaging, where demand has outrun supply. NVIDIA committed $1.3 billion to Amkor on October 21 for South Korea capacity, which Amkor says brings its multi-year NVIDIA agreements in Arizona and South Korea to $3 billion. The two disclosed amounts, $1.5 billion in July and $1.3 billion this week, add up to $2.8 billion.

Amkor broke ground on its Gwangju plant expansion on October 19, a 3 trillion won programme through 2031, and targets a more than 300% increase in South Korea interposer wafer capacity by the end of 2028. NVIDIA's filings say some of these supply commitments can be canceled, rescheduled or changed before firm orders, and listed $279 billion of supply and capacity commitments as of July 26.

Why it matters

Amkor's packaging lines are a bottleneck for AI chips — this prepayment decides whether NVIDIA ships next-generation platforms on time.

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Key Indicators

$3 billion

Amkor's stated total for multi-year NVIDIA agreements

Arizona and South Korea, per Amkor. The two disclosed amounts total $2.8 billion.

300%

Targeted South Korea interposer capacity increase

By end of 2028, per NVIDIA's announcement at GTC Berlin.

$44.66

Amkor share price pre-market October 21

Up 7.1% from the prior close of $41.70.

2.5x

NVIDIA's planned substrate capacity expansion

Over three years, with IBIDEN, Samsung Electro-Mechanics and Unimicron.

$279 billion

NVIDIA supply and capacity commitments

As of July 26, 2026, up from $119 billion a quarter earlier; some can be canceled or rescheduled.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Giel Rutten

President and chief executive, Amkor Technology

Leading Amkor's $3 billion expansion with NVIDIA in Arizona and South Korea

Jensen Huang

Founder and chief executive, NVIDIA

Directing NVIDIA's prepayment strategy across packaging, substrate and testing suppliers

Organizations Involved

Amkor Technology

Outsourced semiconductor assembly and test provider

Building out packaging capacity in Arizona and South Korea under multi-year NVIDIA agreements Amkor totals at $3 billion

The largest US-headquartered outsourced semiconductor assembly and test provider.

Nvidia Corporation

Semiconductor company

Reserving packaging, substrate and testing capacity with prepayments and multi-year agreements while carrying $279 billion of supply commitments as of July 26

Fabless designer of the graphics processors and AI accelerators at the center of the AI build-out.

King Yuan Electronics (KYEC)

Semiconductor testing provider

Reserving future testing lines under a $1.1 billion NVIDIA agreement

A Taiwan-based semiconductor testing house taking NVIDIA capacity reservations.

Timeline

July 2026 October 2026

4 events Latest: October 21st, 2026 · 3 weeks ago

Tap a bar to jump to that date

October 2026
Amkor and NVIDIA announce $1.3 billion South Korea agreement
Latest Deal

The prepayment funds South Korea capacity expansion; total NVIDIA commitments to Amkor reach $3 billion.
October 21st, 2026
NVIDIA details supply chain expansion at GTC Berlin
Announcement

Targets 300% interposer capacity growth with Amkor, 2.5x substrates, doubled testing, and a KYEC reservation.
October 21st, 2026
Amkor breaks ground on Gwangju plant expansion
Expansion

A 3 trillion won programme through 2031 with more than 2,000 new hires, 2 trillion won above the first plan.
October 19th, 2026
July 2026
NVIDIA and Amkor sign $1.5 billion packaging deal
Deal

NVIDIA prepays Amkor to expand advanced packaging and test capacity in Arizona.
July 23rd, 2026

Scenarios

Amkor Hits 300% Interposer Capacity Target by 2028

Likely Resolves by Feb 28, 2029

Discussed by: NVIDIA and Amkor, which announced the 300% target at GTC Berlin

Construction and equipment installation in South Korea stay on schedule, new facilities come online through late 2028, and Amkor reports interposer wafer capacity up more than 300% versus the 2026 baseline. NVIDIA's prepayments convert into contracted output and the partnership expands further.

Amkor Delays South Korea or Arizona Expansion

Possible Resolves by Q2 2027

Discussed by: Ainvest analysis, which flagged delivery risk and climbing build costs

Construction, equipment install or qualification slips past announced dates in either country. The Peoria, Arizona campus cost has already climbed from roughly $2 billion in 2023 to about $12 billion by September 2026, pressing near-term earnings through underutilized capacity during the ramp.

NVIDIA Cuts Packaging Commitments as Demand Softens

Uncertain Resolves by End of 2028

Discussed by: Ainvest analysis, noting prepayments are cheap if forecasts hold and sunk if they don't

AI accelerator demand growth slows before the 2028 lines come online. NVIDIA trims or terminates its prepayment commitments, leaving Amkor with funded but underused capacity and heavier debt service on the build-out.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2023–2024

TSMC's CoWoS packaging bottleneck (2023–2024)

AI accelerator demand overwhelmed TSMC's CoWoS advanced packaging lines, which mount chips with high-bandwidth memory onto interposers. NVIDIA and AMD waited months for packaging capacity, and TSMC poured billions into expansion.

Then

TSMC roughly tripled CoWoS capacity by late 2024, and shipping delays eased as AI demand kept climbing.

Now

The episode established advanced packaging as a structural chokepoint in the AI supply chain.

Why this matters now

NVIDIA is now funding Amkor as a second packaging source so it doesn't depend on TSMC's lines alone.

2017–2019

Memory chip boom-and-bust (2017–2019)

Soaring prices for DRAM and NAND memory spurred Samsung, SK Hynix and Micron to build new fabs. Supply caught up with demand in 2019 and prices collapsed, forcing capacity cuts.

Then

Memory makers slashed output and delayed fabs to shore up prices.

Now

The cycle showed how prepaying for capacity years ahead can turn into stranded investment when demand cools.

Why this matters now

NVIDIA's prepayments fund lines that come online in 2028, a horizon long enough for demand to soften.