Taiwanese chipmaker TSMC intends to invest roughly $90 billion ($2.87 billion) in an advanced packaging factory in northern Taiwan, owing to a boom in demand for artificial intelligence.

Last week, TSMC CEO C.C. Wei stated that the company is unable to meet client demand due to the AI surge and wants to approximately double its capacity for advanced packaging, which includes stacking numerous chips into a single device, cutting the added cost of more powerful computing.

For advanced packaging, especially TSMC's chip on wafer on substrate (CoWoS), capacity is very tight, Wei said after the company reported a 23% fall in second-quarter profit.

According to the world's largest contract chipmaker, TSMC's position as the leading manufacturer of AI chips - including for chip designers Nvidia Corp and Advanced Micro Devices - has not compensated for broader end market difficulties as the global economy recovers more slowly than projected.

This month, the business regained its $500 billion market value as investors increased their wagers on industry companies best positioned to capitalize on the predicted AI boom.

While boasting its own possible role in the AI implementation, TSMC has expressed concern about the prognosis for the smartphone sector, which still accounts for a large portion of its income.

Its monthly revenue fell again in May as individuals and businesses reduced their expenditure on technology.

The successive declines may indicate that the semiconductor industry's downturn has yet to end, while TSMC officials have predicted a steady recovery in the second half and a return to growth in 2024.

According to the firm, the Tongluo Science Park management has formally approved TSMC's application to lease land, and the new plant in the northern county of Miaoli would create approximately 1500 employment.

Even as the major Apple supplier expands internationally, it intends to keep its most sophisticated chip technology in Taiwan, a worldwide powerhouse in semiconductor manufacturing that powers everything from smartphones to electric vehicles.