One of the biggest supply constraints the AI industry faces is with advanced packaging, and given that every entity relies on TSMC, it appears the firm is gearing up to add significant capacity.
TSMC's Advanced Packaging Supply Constraints Force the Firm to Rapidly Add New Capacity, or Risk Losing Customers
We have discussed advanced packaging (AP) bottlenecks extensively on the website, but it is important to note that without adding new capacity, there is no other way to solve this bottleneck in the future. Based on a new report by Taiwan's CNA, it appears that TSMC is now ready to 'double down' on its efforts with advanced packaging supply, as the report claims that the firm is now looking to develop newer facilities, and is even looking to convert the relatively older 8-inch wafer fabs in Taiwan for advanced packaging supply. This is also alongside investing in Arizona, to achieve AP production on domestic homegrounds.
Focusing on Taiwan alone, TSMC intends to equip seven fabs with advanced packaging technologies, including CoWoS, WMCM, and SoIC. Each of these mentioned AP technologies is targeted at specific market segments, such as mobile and HPC, but demand from the latter segment is significantly higher than from any other, which is why a large portion of the seven facilities would be dedicated to the AI buildout. The report suggests that by 2027, TSMC is expected to reach up to 2 million wafer output, up from 1.3 million, indicating that AP supply constraints are being addressed rapidly.
TSMC's expansion into the US still hasn't brought any AP facility into production, and this has also become a huge bottleneck for the company's chip fabs in the region. To address this, TSMC is also investing in two AP facilities in Arizona, which are expected to enter mass production by 2030 and will contribute a large portion of the overall output. Given how the size of AI packages has grown dramatically with each generation, the importance of advanced packaging services has grown significantly amongst HPC manufacturers, which is why TSMC is in the spotlight.
The AP supply constraints have also diverted attention to competitors like Intel, with solutions such as EMIB and EMIB-T, but the main idea is that the demand-supply cycle is under significant pressure right now.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
Follow Wccftech on Google to get more of our news coverage in your feeds.
