Global chipmakers seek to capitalise on the artificial intelligence boom and TSMC acknowledged last week that there is a strong demand for AI chips.

TSMC is the top producer of the world’s most advanced processors it also makes chips found in iPhones, iPads and Macs too.

The facility will be located in Tongluo Science Park in northern Taiwan, TSMC said, adding the investment is expected to create about 1,500 local jobs.

TSMC’s CEO CC Wei said: “For AI, right now, we see a very strong demand. For the front-end part, we don’t have any problem to support. However, on the advanced packaging side, TSMC was experiencing “some very tight capacity.”

“We are increasing our capacity as quickly as possible and we expect that these tightenings will be released next year, but in between, we’re still working closely with our customers to support their growth,” he said.

The Central News Agency reported that TSMC’s packaging production capacity “is in short supply” as Nvidia and AMD compete for capacity.