The race for artificial intelligence is reshaping the semiconductor industry in ways less obvious than headlines suggest. While Samsung, SK hynix, and Micron focus much of their efforts on HBM memory for AI accelerators, other segments are beginning to run out of capacity: conventional DRAM, legacy memories, packaging, testing, and auxiliary services. This is where Taiwan is finding an unexpected opportunity.
It’s not that Taiwanese manufacturers will suddenly replace South Korea in the HBM market, which is dominated by SK hynix and contested by Samsung and Micron. The shift is more subtle. The pressure that started in high-bandwidth memory and advanced nodes is moving toward less visible layers of the supply chain. DigiTimes sums up this phenomenon clearly: the Taiwanese ecosystem is filling gaps left by Korean focus on HBM, especially in legacy memory, packaging, and testing.
HBM consumes capacity and leaves less room for others
HBM has become one of the most sought-after components in AI infrastructure. It is essential for GPUs and advanced accelerators because it offers vastly higher bandwidth than conventional DRAM. But manufacturing HBM isn’t just about changing a production line. It requires wafer capacity, advanced processes, packaging equipment, and priority attention from major manufacturers.
This reallocation has consequences. When Samsung, SK hynix, and Micron dedicate more resources to HBM and server DRAM for AI, there is less flexibility for traditional products. TrendForce already warned that the focus of memory giants on HBM and transitions to advanced nodes will limit growth of conventional DRAM until 2026, with Taiwan’s Nanya Technology and Winbond emerging as stabilizers for DDR4 and mainstream memories.
The paradox is that legacy memory, which a few years ago seemed a mature and less attractive part of the business, is regaining value. DDR4, LPDDR4, specialty memories, embedded flash, and solutions for automotive, industrial, networking, or consumer electronics don’t disappear just because AI advances. Many products still require proven components, cost-effective integration, and long life cycles. If major manufacturers move toward HBM, someone must serve that demand.
Nanya is one of the names most frequently mentioned in this new market perspective. The Taiwanese company has warned that DRAM shortages could extend until 2028, and has indicated that HBM will represent around 10% of global DRAM production in 2026, up from 7% last year and 4% in 2024. Although this increase may seem small percentage-wise, in an industry with limited capacity, it shifts wafer allocation and tightens supply for other categories.
There are also capital movements. Nanya announced in March a capital raise of around $2.5 billion to expand advanced memory production, with investors such as SanDisk, Solidigm, Cisco, and Kioxia. Additionally, SanDisk and Kioxia signed multi-year DRAM supply agreements with Nanya, signaling that customers want to secure capacity outside the three largest global suppliers.
Powerchip, Winbond, and the second tier of memory
The case of Powerchip Semiconductor Manufacturing Corp. also fits this trend. Micron signed a letter of intent to acquire Powerchip’s P5 plant in Tongluo, Taiwan, for $1.8 billion, aiming to ramp up its DRAM production from the second half of 2027. The deal includes about 300,000 square feet of cleanroom space and a long-term foundry relationship for advanced DRAM manufacturing.
The interpretation is twofold. On one hand, Micron needs more capacity because demand continues to surpass supply. On the other, Taiwan re-emerges as a useful piece to absorb part of the global pressure—not only through TSMC and cutting-edge nodes, but via fabs, memory, and specialized services.
Winbond, on the other hand, has a different profile. Its portfolio focuses on specialty memories, mobile DRAM, and embedded flash for code, with presence in sectors like automotive, communications, industrial, IoT, and consumer electronics. While these products are not front and center in AI announcements, they are vital for thousands of devices and systems. During a cycle when giants prioritize HBM, providers of specialized memory can gain bargaining power and improve margins.
This shift doesn’t mean legacy memory is entering a golden age without risks. Many of these technologies depend on mature nodes, old tools, and price-sensitive customers. But when capacity tightens, products once considered secondary become difficult to replace. For manufacturers of industrial equipment, motherboards, embedded systems, automotive, or networking gear, having a stable supply can be as critical as accessing the most advanced chips.
Packaging and testing are also heating up
The other major opportunity for Taiwan lies in encapsulation and testing. AI not only requires more powerful chips; it also demands integration of memory, logic, interposers, substrates, and high-speed connections with extreme precision. This is elevating the importance of advanced packaging and OSAT services, areas where Taiwan already has a strong position.
ASE Technology Holding, the world’s largest packaging and testing provider, expects strong demand for AI chips to boost its advanced packaging sales in 2026. Reuters reported in April that the company forecasts a 10% growth in this segment, exceeding $3.5 billion.
This growth was already underway. ASE had previously indicated that its advanced packaging business could double to $3.2 billion by 2026, supported by AI demand and activity from SPIL, a subsidiary connected for years to NVIDIA’s chip supply. The company also announced plans for additional equipment investments to sustain this expansion.
DigiTimes has also noted improvements in the Taiwanese testing and probe card supply chain, with companies like KYEC, MPI, and WinWay benefiting from demand for AI accelerators, HPC, and advanced packaging. Though not a glamorous market segment, it’s one of the most critical when architectures grow more complex and expensive to validate.
The pressure on testing and packaging has a clear implication: the shortage no longer only concerns the main chip. An AI accelerator could be constrained by memory, packaging, substrates, testing, assembly capacity, or equipment availability. The supply chain’s weakest link is often its least visible bottleneck.
For Taiwan, this represents a strategic opportunity. Its ecosystem isn’t dependent solely on TSMC, though it remains central. Memory, OSAT, testing, PCBs, substrates, AI servers, integrators like Foxconn, and a network of suppliers can create value at multiple layers. Foxconn, for example, reported a 19% increase in Q1 profit and reaffirmed expectations for strong annual growth driven by AI servers, with rack shipments doubling this year.
The conclusion: enthusiasm around HBM is triggering a domino effect. South Korea concentrates a significant portion of advanced AI memory, but this focus leaves gaps. Taiwan is seizing those gaps in traditional memory, mature fabs, advanced packaging, testing, and servers. It’s not an overnight revolution but a gradual redistribution of value within the Asian semiconductor supply chain.
For industrial clients and hardware manufacturers, the message is clear: ensuring supply no longer only involves the big three memory suppliers. It’s also necessary to recognize who can supply legacy products, who has testing capacity, who can package advanced chips, and who can uphold contracts when AI is pulling all resources. In this new silicon geography, Taiwan is regaining influence—even in the niches left by others pursuing the most profitable business at the moment.
Frequently Asked Questions
Why does Taiwan benefit from the HBM boom in South Korea?
Because the concentration of Samsung, SK hynix, and Micron on HBM and advanced memory leaves less capacity for conventional DRAM, legacy memories, packaging, and testing. Taiwanese companies can help fill some of that demand.
Which Taiwanese companies are best positioned?
In memory, Nanya, Winbond, and Powerchip stand out. In packaging and testing, ASE, KYEC, MPI, and WinWay excel, though each operates in different parts of the chain.
Can Taiwan replace Korea in HBM?
Not in the short term. South Korea remains central to HBM, mainly due to SK hynix and Samsung. Taiwan is capturing value in complementary areas and associated bottlenecks.
Why does legacy memory matter if the industry is focusing on AI?
Because many sectors still use DDR4, LPDDR4, embedded flash, and specialty memories. Automotive, industrial, networking, and consumer electronics cannot transition overnight to new technologies.