AT&S Plans Up to €2 Billion Malaysia Expansion to Meet AI Chip Demand

Austrian electronics manufacturer AT&S plans to invest between €1.5 billion and €2 billion in Malaysia to expand production capacity for high-end IC substrates and advanced printed circuit boards, driven by rising global demand for artificial intelligence infrastructure.

The investment will expand the company’s manufacturing site in Kulim, Kedah, building on agreements with semiconductor company AMD and another major technology customer.

AT&S CEO Michael Mertin said the company intends to fully expand the Kulim site as demand for AI and high-performance computing infrastructure continues to grow.

Kulim Capacity to Expand

The expansion will build on the successful ramp-up of AT&S’ first Kulim plant.

Plans include installing additional production capacity at the existing facility, fitting out the previously unused structure of a second plant and constructing a new manufacturing facility for IC substrate cores and advanced printed circuit boards.

AT&S said the planned €1.5 billion to €2 billion investment is supported and financed by long-term customer commitments, reducing some of the financial risk associated with the large-scale capacity expansion.

The agreements remain subject to final negotiation and execution.

AI Drives Demand for Advanced Substrates

The expansion comes as investment in AI infrastructure increases demand for more advanced semiconductor components.

AT&S said the semiconductor industry is seeing a structural shift as computing architectures move from traditional monolithic chips towards more complex chiplet-based designs and heterogeneous systems.

AI workloads are increasing demand not only for graphics processing units but also for CPUs, memory and increasingly complex semiconductor packages.

These changes are driving requirements for larger and more advanced IC substrates with higher integration density, additional layers and improved energy efficiency.

For AT&S, this is creating additional demand for the substrate technologies produced at its Kulim operations.

AMD Supports Expansion

AMD is one of the major customers supporting the new investment.

AT&S also confirmed an agreement with another leading technology company but did not disclose its identity. Reuters reported that industry sources identified the second customer as Intel.

Mertin said AT&S expects at least five leading US technology companies to eventually be represented among customers supported through the expanded operations.

The company sees long-term demand for AI computing infrastructure as a significant growth opportunity for its semiconductor-related manufacturing business.

Malaysia Strengthens Role in AI Supply Chain

The investment adds to Malaysia’s growing position within the global semiconductor and AI hardware supply chain.

Kulim is already an important manufacturing location for semiconductor and electronics companies, supported by an established industrial ecosystem in northern Malaysia.

AT&S’ expansion will increase the country’s capacity for high-end IC substrates and advanced printed circuit boards, components that are becoming increasingly important as semiconductor architectures grow more complex.

The project also reflects how rising AI infrastructure investment is extending beyond chip designers and data centres into the broader manufacturing supply chain required to produce high-performance computing systems.

AT&S Raises Growth Outlook

Following the new customer agreements, AT&S raised its financial outlook for the 2026/27 financial year.

The company now expects currency-adjusted revenue growth of 45% to 55%, compared with its previous forecast of 30% to 35%. It also increased its expected EBITDA margin to between 32% and 37%.

Capital expenditure for the year is expected to reach between €1 billion and €1.2 billion, up from the previous forecast of €400 million.

AT&S said the full operational impact of the Kulim expansion will develop over the next several years as new production capacity is installed and ramped up.

AI Boom Drives Semiconductor Manufacturing Investment

AT&S’ Malaysia expansion highlights the wider manufacturing impact of the global AI infrastructure build-out.

As computing systems require more powerful processors, memory and advanced packaging architectures, suppliers across the semiconductor value chain are increasing production capacity to meet demand.

For Malaysia, the Kulim investment adds another major semiconductor manufacturing project as the country works to strengthen its position in higher-value electronics and advanced manufacturing.

With long-term customer commitments supporting the expansion, AT&S is positioning its Malaysian operations as a major production base for the next generation of AI and high-performance computing hardware.