TSMC is preparing to expand again in Chiayi, southern Taiwan, as AI demand keeps outrunning its ability to package advanced chips — good news for the region and for AI chip supply.

• A third construction phase is being prepared next to TSMC's existing Chiayi plots, giving it more land for advanced packaging.
• AI demand is the driver: packaging is the bottleneck holding back high-end chip output.
• The first two plants start mass production next year; three more are underway, with everything finished by 2031.
• Six other companies in chip equipment, precision parts and biotech have also signed on, turning the site into a cluster.
• Taiwan's park authority frames it as keeping the industry rooted at home rather than moving offshore.

Outlook: Formal approval for the third phase is the next step, and more land will likely be set aside for TSMC packaging as AI orders keep growing.