Advanced Packaging Localization: Amkor Arizona Timeline

Why Advanced Packaging Localization Matters Now

The semiconductor industry is shifting how advanced packaging reaches customers. With CHIPS Act funding and geopolitical tensions reshaping supply chains, the US is establishing domestic advanced packaging capabilities. Amkor’s Arizona facility marks a critical milestone, potentially redefining delivery timelines and customer relationships.

Advanced packaging has become semiconductor manufacturing’s bottleneck. While chip fabrication receives attention, packaging—where dies are assembled, interconnected, and prepared for integration—remains concentrated in Asia. This creates supply chain vulnerability and extends delivery timelines for US customers.

Amkor’s Arizona Investment: Scale and Significance

Amkor Technology, the world’s second-largest OSAT provider, plans to build a $2 billion advanced packaging facility in Peoria, Arizona. This represents one of the largest US packaging infrastructure investments in decades, supported by the CHIPS Act with funding under negotiation.

The facility will focus on fan-out wafer-level packaging (FOWLP), flip-chip packaging, and chiplet-based integration—essential for high-performance computing, AI accelerators, and advanced networking where US companies lead technologically but rely on Asian packaging.

Timeline from Ground Breaking to Volume Production

The Arizona facility timeline:

• Planning and Approval (2022-2023): Site selection, environmental assessments, CHIPS Act applications, initial design.
• Construction (2024-2026): Facility construction, cleanroom installation, infrastructure development.
• Equipment Installation (2025-2027): Installing lithography tools, bonding equipment, testing systems, automation infrastructure.
• Qualification and Ramp (2026-2027): Process qualification, technology transfers, yield improvement, initial production.
• Volume Production (2027-2028): Meaningful production volumes supporting customer demand.

Meaningful volume availability begins in 2027-2028, approximately five years from planning to production scale.

Impact on End-to-End Delivery Timelines

Domestic advanced packaging fundamentally alters delivery timelines. Current routing:

• Wafer fabrication in US or Taiwan
• Shipping to Asia for packaging
• Packaging and testing (4-8 weeks)
• Shipping back to US for final assembly
• Final testing and qualification

This adds 8-12 weeks and creates vulnerability to geopolitical disruptions and capacity constraints.

With Arizona packaging:

• Wafer fabrication in US
• Local transport to Arizona (days versus weeks)
• Advanced packaging and testing
• Direct delivery to US customers

Domestic routing reduces timelines by 6-10 weeks while improving visibility and reducing geopolitical risk.

Customer Binding and Strategic Partnerships

Localization shifts customer relationships from transactional to strategic, with major customers securing long-term capacity agreements.

Apple is a key customer, gaining faster time-to-market, improved IP protection, reduced Taiwan dependence, and US policy alignment.

Other anchor customers—AMD, NVIDIA, Intel, Qualcomm, and hyperscalers—seek supply chain resilience and reduced geopolitical risk.

Customer binding mechanisms:

• Capacity Reservations: Volume commitments for guaranteed allocation.
• Technology Co-Development: Joint development creating switching costs.
• Financial Commitments: Upfront funding securing specialized capacity.
• Long-Term Agreements: Multi-year contracts ensuring supply and revenue visibility.

CHIPS Act Impact on Economics and Strategy

The CHIPS Act’s $52.7 billion for US semiconductor manufacturing transforms domestic packaging economics.

Asian facilities historically offered cost advantages through established ecosystems and lower labor costs.

CHIPS funding addresses this through subsidies and tax credits, likely covering 15-30% of Amkor’s costs.

Beyond economics, it signals long-term US commitment to domestic capabilities.

Workforce Development and Operational Challenges

Arizona lacks existing packaging expertise, requiring extensive recruitment and training of engineers, technicians, and specialists.

Amkor partners with Arizona State University, community colleges, and CHIPS programs, transferring personnel from Asian facilities while developing local talent.

Challenges extend beyond technical skills to supply chain management and customer support.

Broader Ecosystem Development

Amkor’s facility catalyzes ecosystem growth as suppliers, equipment services, and logistics providers establish Arizona presence.

Network effects emerge: supplier density increases, lead times shorten, costs decline, and collaboration intensifies.

Arizona’s semiconductor cluster—including TSMC fabrication and Intel research—creates a genuine ecosystem rather than isolated facilities.

Competitive Dynamics and Industry Response

Amkor’s investment spurred responses from competitors. ASE Technology evaluates US expansion. Intel expands packaging in New Mexico and Arizona. Samsung considers Texas packaging investments.

This competitive response accelerates localization and provides customers multiple domestic sourcing options.

Implications for Global Supply Chain Architecture

Advanced packaging localization signals a shift from global cost-optimized supply chains to regional resilience-focused architectures.

This regionalization impacts how companies structure operations, customers make sourcing decisions, and governments support strategic industries. Arizona serves as a model for European and other regional initiatives.

Looking Forward: Beyond 2028

As volume production begins in 2027-2028, focus shifts to next-generation technologies: 3D stacking, heterogeneous integration, and chiplet ecosystems—determining whether US packaging can maintain technological parity with Asia.

Success will be measured by innovation speed, new product enablement, and competitive advantages beyond supply chain security.

This represents one of semiconductor supply chains’ most significant restructurings in decades, with implications extending far beyond individual facilities.