Nvidia prepays suppliers to ease chip testing and optics bottlenecks

Nvidia secured agreements with Amkor Technology, IBIDEN, King Yuan Electronics (KYEC), Samsung Electro-Mechanics, Siliconware Precision Industries (SPIL), and Unimicron Technology Corporation to expand critical manufacturing capacity. Announced at GTC Berlin 2026, the deals cover substrates, advanced packaging, chip testing, and optical engines. Nvidia is using upfront payments to help suppliers finance expansion while securing priority access to future output.

A $1.1 billion capacity reservation advance to KYEC will support new US testing facilities and equipment through its subsidiary AeternZ Semiconductor Testing Corporation, with high-volume production targeted for April 2027. Singapore testing operations target high-volume production in February 2027. Broader commitments aim to double semiconductor testing capacity, expand substrate output 2.5 times over the next three years, and increase Amkor’s South Korean interposer wafer capacity by more than 300 percent by the end of 2028. Nvidia and SPIL are targeting a 15x increase in optical-engine capacity by mid-2027.

The expansion does not eliminate every bottleneck. Co-packaged optical switches and AI accelerators compete for the same advanced packaging resources, leaving a shared constraint even as optical-engine production grows. Nvidia CFO Colette Kress disclosed that supply commitments rose to $279 billion from $119 billion in a single quarter, while the supply-demand gap is expected to persist through at least the fiscal year ending early 2028.