ASE Technology Holding has increased its 2026 capital expenditure forecast by $2 billion to approximately $10.5 billion as strong AI demand drives expansion across its chip packaging and testing operations.

The Taiwan based company previously expected to spend $8.5 billion this year. Half of the additional investment will fund new facilities, while the remaining $1 billion will be directed toward equipment.

ASE is building 13 new sites and repurposing eight existing factories to expand production capacity.

The company said revenue from its leading edge advanced packaging business is tracking ahead of its previous 2026 guidance of $3.5 billion. Chief Financial Officer Joseph Tung said ASE aims to double revenue from the business in 2027.

Demand is being driven by AI systems that require increasingly complex packaging, testing, storage, connectivity, and power components.

ASE subsidiary Siliconware Precision Industries is a major packaging supplier for Nvidia’s AI chips.

The spending increase accompanied strong second quarter results. ASE reported revenue of NT$191.06 billion, or approximately $5.88 billion, up 27% from the previous year.

Net income rose 180% to NT$21.07 billion. The company also reported record revenue of NT$126.15 billion from its advanced testing and manufacturing division.

ASE shares had gained more than 100% since the beginning of the year before Thursday’s earnings announcement, significantly outperforming Taiwan’s broader stock market.