TSMC Said to Near Deal for 2 AUO Plants to Expand CoWoS

Commercial Times reported on 29 October 2026 that TSMC and its affiliate Xintec are said to be nearing a deal to buy AUO’s L7A and L5C display plants in the Central Taiwan Science Park, in a transaction the paper says may exceed NT$20 billion. Citing unnamed supply-chain sources, the paper says TSMC is weighing the plants for advanced packaging.

By our arithmetic, NT$20 billion across two plants is an average of more than NT$10 billion per plant. Commercial Times says a deal above NT$20 billion would exceed the NT$17.1 billion paid for an Innolux 5.5-generation plant, which it calls the largest single sale of an older panel plant to date.

Business Pill · Vertical Integration

An evergreen Business Engineer explainer on vertical integration, when a company brings more of its supply chain in-house. It explains the general idea only and does not discuss TSMC or AUO.

What Was Reported

Commercial Times says TSMC has sent staff to the AUO sites several times for due diligence and to assess the plants’ facility systems and the work needed to convert them for advanced packaging. It says reports of TSMC inspecting the two plants first surfaced in June.

The paper says the sale is planned in stages: two plants now, with two more AUO plants slated for sale later, on which the TSMC group is expected to receive a right of first refusal. It says the final decision still needs approval from AUO’s board.

Commercial Times says the split between the buyers, the scope of the deal and its amount all await a formal announcement. AUO’s spokesperson channel told the paper that the company does not comment on market rumours and that company announcements prevail.

Dan Nystedt, who relayed the report in English, put the figure at about US$620 million; that conversion is his.

What Was Posted on X

Dan Nystedt’s post says TSMC is nearing a deal with AUO to buy up to 4 plants to convert for CoWoS advanced packaging, citing a media report and unnamed supply-chain sources, with a deal expected for 2 plants and a right of first refusal for 2 more.

The Two Plants

Commercial Times says L7A is a 7.5-generation plant that began production in 2006, with a relatively new building and large floor area, and that L5C makes notebook panels while L7A makes mainly TV panels and some monitor panels.

The paper says both plants sit next to TSMC’s Fab 15 in Taichung and are still running normally. It says that even after a signing, AUO would need to requalify products at other sites, and that the handover is generally expected around the end of next year.

Why Packaging

Commercial Times says CoWoS capacity remains tight, citing chip-industry sources, and describes it as a factor behind TSMC expanding advanced packaging at its AP7 and AP8 sites. It says TSMC’s Taichung campus already includes the CoWoS-L site AP5.

The paper says the AUO plants would help TSMC bring advanced processes and packaging together in central Taiwan, and could be paired with nearby optical-component suppliers to build a co-packaged optics ecosystem.

On Xintec, Commercial Times cites analysts who say TSMC owns about 41% of the company and is its largest customer, at more than 70% of revenue. It says Xintec’s new P2 plant has about 23,000 square metres of cleanroom that is already fully used, and that Xintec is looking for more space for system-level testing.

Connecting the Coverage

We reported on TSMC preparing CoWoS price rises of up to 20% and on GlobalFoundries making CoWoS interposers in New York. On the equipment side, see KLA’s guidance for a $4.7 billion quarter.

The Structural Read

As we read the Commercial Times reports, TSMC is buying time as much as floor space: Dan Nystedt, relaying the report, notes that older plants with cleanrooms shorten the time to new CoWoS capacity compared with building anew.

As we read the paper, the deal also concerns Xintec: analysts cited by Commercial Times say TSMC owns about 41% of it, and the paper itself says Xintec is looking for more space for system-level testing.

Commercial Times says the final decision still needs AUO board approval and that the split between TSMC and Xintec awaits a formal announcement.

Three Implications

FOR TSMC Commercial Times says CoWoS capacity remains tight and ties the AUO plants to TSMC’s packaging expansion alongside its AP7 and AP8 sites.

FOR AUO The paper says the two plants make notebook, TV and some monitor panels and are still running, and that AUO would requalify those products at other sites.

FOR XINTEC Analysts cited by Commercial Times say TSMC is Xintec’s largest customer, at more than 70% of revenue; the paper itself says Xintec’s new P2 cleanroom is already fully used.

The Business Engineer Lens

This story maps onto the Business Engineer framework The Nine Layers of AI.

The framework argues: “This entire ecosystem has been shaped by constraints, bottlenecks, chokepoints, and scarcity at every layer.” It describes AI as a layered stack of technologies and infrastructure.

Commercial Times describes one such constraint: it says CoWoS capacity remains tight. The framework does not discuss TSMC’s AUO talks.

What Is Not Established

Neither TSMC, Xintec nor AUO has announced a deal. Commercial Times reports it from unnamed supply-chain sources and describes the NT$20 billion figure as an estimate that may be exceeded, and the paper does not give the capacity TSMC would add.

The paper does not say how the purchase would be split between TSMC and Xintec, and it does not give a timeline for a board vote at AUO.

The Bottom Line

Commercial Times reports that TSMC and Xintec are said to be nearing a deal for two AUO plants, possibly above NT$20 billion, to add advanced-packaging space. By our arithmetic that is more than NT$10 billion per plant on average; AUO says it does not comment on market rumours.