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Nvidia (NASDAQ:NVDA) is reportedly financing billions of dollars in new factories and equipment to overcome a shortage limiting how many AI chips the industry can produce.

The money is going to Taiwan’s Siliconware Precision Industries (SPIL), a subsidiary of ASE Technology Holding Co. (NYSE:ASX), Reuters reported Friday, citing an industry executive. The scale of Nvidia’s financial support had not previously been disclosed.

SPIL specializes in advanced chip packaging.

On an Oct. 29 earnings call, ASE CFO Joseph Tung said the company expected higher capital spending and negative cash flow in 2027, and could turn to customer financing to help fund its expansion, when asked about prepayment arrangements with customers.

Why Nvidia Is Looking Beyond TSMC

Advanced packaging is one of the later stages of chip production, bringing together processors and memory in a single unit so they can exchange data at extremely high speeds. It’s essential for powerful AI chips, but the specialized factories needed to do it are struggling to keep up with demand.

Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) dominates the process, but shortages are pushing more work toward outside packaging specialists, including ASE, according to TrendForce.

Steve Williams, a semiconductor veteran who spent more than 25 years at Applied Materials Inc. (NASDAQ:AMAT), told Benzinga last month that advanced packaging was TSMC’s biggest immediate bottleneck, one that even its enormous capital spending would struggle to resolve.

ASE is struggling with the same shortage.

“The biggest bottleneck today is really still the space,” Tung said.

ASE raised its 2026 capital spending budget from $10.5 billion to $11.5 billion. It expects full-process advanced-packaging revenue to more than triple, from $300 million this year to over $1 billion in 2027.

Even so, Tung warned that next year’s demand could be far higher than ASE can supply.

Nvidia’s Bigger Bet

“Demand is extraordinary. Capacity is the constraint,” Nvidia CEO Jensen Huang said on Oct. 21.

Nvidia is putting money into several parts of its supply chain. It has announced a $1.1 billion advance to chip-testing company KYEC and a multibillion-dollar advance to Japanese chip-materials supplier Ibiden.

Expanding production could help Nvidia meet demand and sell more chips, as it competes with Apple for the title of world’s most valuable company.

On Polymarket, traders give Apple Inc. (NASDAQ:AAPL) a 62% chance of finishing 2026 on top, compared with 39% for Nvidia.

But expanding packaging capacity may not solve all of Nvidia’s supply problems.

Williams previously told Benzinga that the next shortage could emerge in the factories making the processors themselves, or in the equipment needed to expand those factories.

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