TSMC is reportedly facing massive demand for its advanced packaging services, mainly due to its dominant usage in AI chips from NVIDIA and others.
TSMC Is Forced To Schedule Production By Up To One Year Earlier, Creating Huge Pressure On The Supply Chain
TSMC is undoubtedly one of the leading suppliers for advanced packaging technologies like CoWoS, alongside other suppliers such as ASE Technology. However, the Taiwan giant is known to make up for a massive portion of packaging production, but now, the demand is so immense that TSMC cannot keep up with customers' demand alone. Based on comments by TSMC's Vice GM of Advanced Packaging Technology (via TED), it is revealed that the firm has to speed up its packaging product roadmap to keep up with the AI roadmaps from NVIDIA and others.
The Taiwan giant claims that deploying packaging production lines in a 'sequential' manner isn't possible anymore, as customers have forced the firm to speed up the process by more than three quarters, and in some cases, even a year. TSMC is now adopting a strategy to 'future-proof' itself, which involves ordering required equipment ahead of schedule. Apart from this, TSMC has partnered up with local packaging suppliers and has even formed an alliance called "3DIC Advanced Packaging Manufacturing Alliance", which includes TSMC, ASE, and several firms.
The demand for technologies like CoWoS, SoIC, and others is immense because AI GPU manufacturers like NVIDIA operate at a six-month to one-year product cadence. This means that for suppliers to cater to the demand, they would need to prepare production lines way ahead of schedule. For example, NVIDIA's Rubin is set to debut after Blackwell Ultra mass production after just six months, and since there are massive architectural differences between the two lineups, TSMC and others need to move accordingly.
The pressure on the advanced packaging industry requires diversification within the supply chain, and for now, Taiwan is the dominant place for all packaging services. TSMC has plans to open a facility in the US, but in the short term, it seems like Taiwanese suppliers have geared up to collaborate and fulfill the gigantic demand.
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