TSMC Eyes AUO Plants, Boosting CPO Expansion

According to industry sources, TSMC is reportedly considering spending more than NT$30 billion (approximately RMB 6.33 billion) to acquire two older-generation panel manufacturing facilities, L7 and L5C, operated by AUO in Taiwan’s Central Taiwan Science Park. The potential acquisition would provide additional space for large-scale advanced packaging technologies such as CoPoS and FOPLP, as well as future co-packaged optics (CPO) development.

Sources said TSMC has already completed an on-site assessment of the facilities. AUO is reportedly prioritizing the disposal of the two plants, with plans to submit the transaction to its board of directors in October and complete production-line relocation and facility clearance by the end of the first quarter of 2027. However, neither TSMC nor AUO has officially confirmed the potential transaction.

Industry observers believe TSMC is interested not only in the existing factory buildings but also in their large cleanroom areas, stable power infrastructure, and capability to handle large glass substrates. These facilities could support panel-level packaging, large-scale optoelectronic integration, and other advanced packaging applications while reducing the time required to build new production capacity.

TSMC already has a significant presence in Central Taiwan Science Park, covering both advanced semiconductor manufacturing and advanced packaging. Its Central Taiwan Science Park Phase 2 Fab 25 project is planned to include four A14 (1.4nm) fabs, with A14 production expected to begin in 2028. Its existing advanced packaging and testing facility, AP5, has also entered CoWoS production.

At the same time, TSMC is developing its COUPE silicon photonics platform to integrate electronic chips and photonic chips with technologies such as SoIC and CoWoS. The platform is designed to address the growing demand for high-speed, low-power interconnects in AI switches and high-performance computing systems.

In the optical component sector, Largan Precision has recently acquired land and factory facilities in Taichung through three transactions totaling approximately NT$2.568 billion. The company has secured its first mass-production order for fiber array (FA) products, with its first automated pilot production line scheduled for completion by the end of the third quarter. Mass production could begin as early as mid-2027, while the company is also developing microlens arrays (MLA) and integrated fiber array unit (FAU) products.

If completed, TSMC’s potential acquisition of AUO’s facilities could further strengthen its advanced packaging and optical interconnect capabilities as AI data centers increasingly shift from conventional copper-based interconnects toward high-speed optical technologies.