TSMC's advanced packaging capacity is 'fully booked' at the moment, which is a huge concern for the AI industry, but it appears that the Taiwan giant has a strategy in sight.
TSMC's 'CoWoS' Production Lines Have No Room For Further Orders, As the Firm Now Relies on Outsourcing
Advanced packaging has been the 'holy grail' for manufacturers when it comes to combining multiple chiplets to scale up the performance of their AI chips, which is why solutions like TSMC's CoWoS are experiencing peak interest from companies such as NVIDIA, AMD, Google, Apple, MediaTek, and many more. However, based on supply chain sources, TSMC is no longer able to fulfill packaging demand on its own, and the firm has now decided to outsource orders, with Taiwanese firms like ASE Technology and SPIL being responsible for catering to the 'spillover' orders coming from TSMC.
TSMC is actively expanding its CoWoS production lines, as the firm looks to develop newer plants in both Taiwan and the US. However, judging by the urgency of its clients, the Taiwan giant is now outsourcing orders, marking a major shift in its strategy. Firms like ASE Technology have reported spending 'billions' in expanding their production footprint to meet anticipated demand, and it appears that this is one of the ways TSMC has adopted to ensure that client demands are met, and to, of course, prevent competitors like Intel from gaining an edge in the packaging segment.
It won't be wrong to say that advanced packaging has become as important as cutting-edge processes for tech giants, and given that NVIDIA, AMD, and Apple are among the biggest clients of CoWoS-L and CoWoS-S, companies like Google, Qualcomm, MediaTek and many more are always in the pursuit of exploring alternatives, which is why Intel has recently popped up as an emerging competitior in the segment. However, with TSMC outsourcing demand, the firm will have a broader range of production lines to access, which is one way to avoid competition for customer orders.
It would be interesting to see how the advanced packaging supply chain evolves in the future, given that it is gaining immense importance in the world of computing, which ultimately means that a single player alone won't be able to account for the entire industry's orders.
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.
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