Taiwan Semiconductor Manufacturing Company (TSMC) is racing to enhance its CoWoS (Chip on Wafer on Substrate) production to meet the overwhelming demand from the AI market, which is stretching the supply chain to its limits. This advanced packaging technology is pivotal in AI accelerator development, fueling its soaring popularity since the AI boom began.
Despite ramping up production significantly in recent months, TSMC is struggling to keep pace with the needs of the industry. The latest reports indicate that the demand for TSMC’s CoWoS has hit a bottleneck, mainly due to NVIDIA’s latest Blackwell demands. As a result, TSMC plans to double its production capacity by the end of 2025.
The shortage is partly due to the lack of equivalent technology available from competitors, compelling firms like Apple, MediaTek, Google, and Amazon to rely on TSMC for their AI hardware needs. This rush to secure CoWoS capacity has led to a significant spike in demand, especially in the current quarter.
Currently, TSMC can produce 36,000 CoWoS units monthly, but plans are underway to boost this output to 90,000 units by the end of next year, with an ambitious target of reaching 130,000 units by 2026. This marks a nearly fourfold increase in production capacity within a short period. Due to this steep demand, TSMC is also planning to increase prices for CoWoS, adding another layer to its strategy.
As the spotlight intensifies on TSMC, its proven leadership in semiconductor technology, particularly in 5nm and 3nm processes, further solidifies its position as the go-to manufacturer for firms looking to meet their AI production requirements. This puts TSMC ahead of competitors like Samsung and Intel, who seem to be falling behind in the current race.
In this climate, TSMC’s ability to expand and innovate rapidly will be crucial in satisfying the appetites of tech giants and maintaining its dominant position in the semiconductor industry.
