TSMC vs. Amkor: TSM and AMKR, Which AI Chip Stock Is Better Suited for Long-Term Holding?

TSMC is the world's largest wafer foundry and possesses advanced packaging platforms such as CoWoS, InFO, and SoIC. Among them, CoWoS is mainly used for 2.5D integration, SoIC focuses on 3D chip stacking, and InFO covers wafer-level packaging.

As AI chip sizes and integration complexity increase, TSMC is also expanding the packaging size of CoWoS. Jun He, Vice President of Advanced Packaging Technology and Services at TSMC, previously stated that 5.5-reticle-size CoWoS has entered mass production, with yields consistently exceeding 98% across products from multiple AI customers, and reaching 99% for certain products.

Alongside technology upgrades, TSMC is also continuing to expand its production capacity. In 2026, the company's capital expenditures are projected to be between $60 billion and $64 billion, with advanced packaging, testing, reticle manufacturing, and other projects accounting for a combined total of approximately 10% to 20%.

Unlike TSMC, Amkor does not operate a wafer foundry; its core business is providing packaging and testing services for chip companies and wafer manufacturers. In the second quarter of 2026, its Advanced Products revenue was $1.557 billion, representing approximately 82% of total revenue.

In terms of financial scale, the two companies are not in the same league. TSMC's second-quarter revenue in U.S. dollars was approximately $40.2 billion, with a gross margin of 67.7% and net profit of about $22 billion; Amkor's revenue for the same period was $1.898 billion, with a gross margin of 16.8% and net profit of $174 million.

Growing demand for AI accelerators is driving TSMC to continue expanding its CoWoS capacity. Citing industry and institutional estimates, TrendForce News reported that TSMC's monthly CoWoS capacity could reach 120,000 to 140,000 wafers in 2026, and the supply-demand gap may gradually narrow as new capacity comes online, though TSMC has not released corresponding official capacity guidance.

Meanwhile, Amkor's expansion focus is in the United States. The company is constructing an advanced packaging facility in Arizona, with a planned total investment of approximately $7 billion. The first manufacturing facility is expected to be completed in mid-2027, with production scheduled to start in early 2028.

Amkor has also secured up to $407 million in direct funding support under the U.S. CHIPS and Science Act, with disbursements tied to project milestones.

Centered around its U.S. advanced packaging business, Amkor secured two long-term partnerships this year with TSMC and Nvidia (NVDA). In June, TSMC signed a 10-year agreement with Amkor, under which TSMC will procure advanced packaging and testing services from Amkor. The two parties also previously announced that they would collaborate in Arizona to introduce advanced packaging technologies, including CoWoS and InFO.

In July, Amkor signed a multi-year advanced packaging and development agreement worth $1.5 billion with Nvidia, which includes an advance payment from Nvidia to Amkor to support the construction of U.S. advanced packaging capacity. Nvidia's participation provides a clear foundation of customer cooperation for its U.S. expansion.

TSMC needs to continuously invest massive capital to expand its advanced process nodes and advanced packaging. If AI demand growth slows in the future while new capacity continues to come online, capacity utilization and return on investment for advanced packaging businesses such as CoWoS may come under pressure. In addition, geopolitics remains a long-term risk that TSMC cannot ignore.

The main risks facing Amkor stem from new plant construction and earnings volatility. The company's second-quarter gross margin was 16.8%, and the impact of changes in capacity utilization, product mix, and customer demand on profitability is even more pronounced.

The Arizona project remains in the construction phase, and the company expects to incur initial ramp-up costs from 2027 to 2028, while large capital expenditures could also put pressure on cash flow during the construction period.

If considering a holding horizon of over five years, TSM is better suited for conservative investors, while AMKR represents a higher-elasticity option.

TSMC's competitive edge extends beyond its scale and profitability. It benefits from the demand for advanced processes driven by AI chips while directly participating in advanced packaging segments like CoWoS, ensuring its growth is not reliant on a single business driver.

Amkor is much smaller in scale than TSMC. Once its new U.S. facility successfully commences production and secures more AI and high-performance computing (HPC) orders, the boost to its revenue and earnings could be even more significant.

The company targets revenue of $8.5 billion to $9.5 billion by 2028. By 2030, revenue is projected to exceed approximately $11 billion, with a gross margin above roughly 22% and earnings per share over approximately $5. Amkor also expects computing revenue to account for about 35% of its total by 2030, up from 20% in 2025.

This growth potential comes with higher risks. If the construction or capacity ramp-up of the Arizona project falls short of expectations, or if demand for advanced packaging slows, Amkor could be affected more noticeably than TSMC.

Therefore, for long-term investors who prioritize earnings stability, technological leadership, and industry standing, TSM is more attractive. Conversely, for those who are bullish on the expansion of U.S. advanced packaging and willing to take on the risks of new plant construction, capacity utilization, and margin volatility, AMKR may offer greater upside potential.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.