Investing.com-- Taiwan Semiconductor Manufacturing Co, or TSMC, is close to finalizing specifications for an advanced approach to chip packaging in order to meet demand for more power artificial intelligence chips, Nikkei Asia reported on Tuesday.

The world’s largest contract chipmaker is developing new technology allowing it to accommodate more semiconductors within a single chip and improve computing performance, Nikkei reported, citing two sources with knowledge of the matter.

TSMC is targeting small volumes of production by around 2027, the report said, and is building a production line in the Taiwanese city of Taoyuan.

Chip packaging is among the final steps of chip production, where semiconductors are encapsulated in a supporting case- a substrate- to integrate them into an electronic system.

TSMC’s new packaging method will involve using a square substrate that can potentially accommodate more semiconductors, as opposed to current industry standards for a round substrate.

Development of new packaging technologies comes amid a greater demand for computing power from the AI industry, as generative AI expands its capabilities.

TSMC’s advanced CoWoS packaging technology entails the integration of more semiconductors into a single chip, greatly increasing its processing power. This has been crucial for AI applications, with majors such as Nvidia (NASDAQ: NVDA ), Broadcom (NASDAQ: AVGO ), Amazon (NASDAQ: AMZN ), Google (NASDAQ: GOOGL ), and AMD (NASDAQ: AMD ) all relying on the technology for their chips.

TSMC has benefited greatly from increased chip demand over the past two years, as global companies piled into AI to gain an edge in the fast-growing industry. The Taiwanese chipmaker is the world’s biggest contract chipmaker and is a key player in the global chip industry.