Nvidia (NASDAQ: NVDA) is even paying upfront to lock in testing capacity ahead of time so it can deliver more AI chips. On October 21, it announced an arrangement to provide King Yuan Electronics with an $1.1 billion capacity prepayment to support a new U.S. testing facility, which is targeted to begin mass production in April 2027.
And King Yuan Electronics isn’t the only supplier involved in this expansion. Samsung Electro-Mechanics has joined its substrate supply chain, and Amkor is also preparing to increase its advanced packaging capacity. Once an order comes in, all these stages have to be in place before chips can become products customers can actually use.
The company expects its total testing capacity in 2027 to be double what it was in 2026. This arrangement gives me more confidence in NVDA’s deliveries over the next few quarters. If capacity comes online as planned, it should reduce the risk of having orders but being unable to ship, and make it easier to turn demand into revenue, supporting the stock price.
That said, the new King Yuan facility is targeted to begin mass production next year, so it shouldn’t be counted as additional output this quarter. The prepayment will also tie up cash upfront, and if customer demand slows, locking in capacity ahead of time won’t be so straightforward.
What matters more to me is that this expansion advances substrates, packaging, and testing all at once. If only one stage is addressed while the others remain bottlenecks, Nvidia still won’t be able to deliver. For a company like Nvidia that makes money from complete AI systems, this kind of supply-chain preparation matters more than simply announcing a new partnership.
And King Yuan Electronics isn’t the only supplier involved in this expansion. Samsung Electro-Mechanics has joined its substrate supply chain, and Amkor is also preparing to increase its advanced packaging capacity. Once an order comes in, all these stages have to be in place before chips can become products customers can actually use.
The company expects its total testing capacity in 2027 to be double what it was in 2026. This arrangement gives me more confidence in NVDA’s deliveries over the next few quarters. If capacity comes online as planned, it should reduce the risk of having orders but being unable to ship, and make it easier to turn demand into revenue, supporting the stock price.
That said, the new King Yuan facility is targeted to begin mass production next year, so it shouldn’t be counted as additional output this quarter. The prepayment will also tie up cash upfront, and if customer demand slows, locking in capacity ahead of time won’t be so straightforward.
What matters more to me is that this expansion advances substrates, packaging, and testing all at once. If only one stage is addressed while the others remain bottlenecks, Nvidia still won’t be able to deliver. For a company like Nvidia that makes money from complete AI systems, this kind of supply-chain preparation matters more than simply announcing a new partnership.
