Nvidia commits $1.5 billion to Amkor for US chip packaging

The prepayment, announced Thursday, will fund expanded advanced packaging and testing facilities in Arizona, addressing a critical bottleneck in AI chip production as demand for Nvidia's data center processors outstrips supply.

"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," Debora Shoquist, executive vice president of operations at Nvidia, said in a statement.

The multi-year agreement covers capacity reservations and joint technology development for advanced packaging methods including heterogeneous integration and high-density interconnects — techniques that combine multiple silicon dies into unified high-performance systems capable of efficient energy use and high data throughput. Amkor shares surged 12% in after-hours trading, while Nvidia slipped 0.4%.

Advanced packaging has emerged as a key bottleneck in semiconductor production, with TSMC's CoWoS (chip-on-wafer-on-substrate) capacity fully booked through 2027. The Amkor deal gives Nvidia an alternative US-based packaging channel, reducing reliance on Taiwan for critical AI infrastructure components at a time when geopolitical tensions have made supply chain diversification a board-level priority for every major chip company.

The partnership aligns product roadmaps across Nvidia's portfolio, including data center graphics processors, networking hardware, and accelerated computing platforms. Amkor, which operates extensive supply chain networks across Asia, will use the prepayment to accelerate its US manufacturing footprint, establishing full turnkey advanced packaging and testing capabilities in Arizona — a state that has become a hub for semiconductor investment following the CHIPS Act.

"This strategic partnership with Nvidia underscores the central role advanced packaging plays in enabling the future of AI," Kevin Engel, chief executive officer of Amkor Technology, said. Engel added that the deal accelerates Amkor's long-term technology plans while expanding American capabilities for critical AI systems.

The $1.5 billion prepayment represents one of the largest single commitments by a chip designer to a packaging partner. For context, Nvidia's data center revenue reached $47.5 billion in its most recent fiscal year, making the Amkor investment equivalent to roughly 3% of that segment's annual sales. The deal also strengthens the onshoring narrative for US semiconductor supply chains, following the CHIPS Act's $52 billion in manufacturing incentives that have drawn TSMC, Intel, and Samsung to build fabs on American soil.

Nvidia shares, trading at roughly 35 times forward earnings, face limited near-term dilution from the prepayment given the company's $38 billion cash and equivalents pile. For Amkor, the deal locks in a marquee customer and provides funding to compete with ASE Technology and JCET for advanced packaging market share in a segment where global spending is projected to exceed $50 billion by 2028. The broader implication: AI infrastructure investment is shifting from chip design alone to the full manufacturing and packaging stack, benefiting equipment makers and packaging specialists across the supply chain as hyperscalers and chip companies race to secure every link in the production chain.

This article is for informational purposes only and does not constitute investment advice.