TSMC’s CoWoS Capacity Doubles Over Two Years, Yet Demand Outpaces Supply: TrendForce

TSMC's recent earnings call revealed plans to double its advanced packaging capacity, but even with this expansion, demand is expected to outstrip supply, highlighting the growing importance of advanced packaging in the tech industry and the need for TSMC to keep up with demand to drive future innovation.

TSMC's plans to double its CoWoS capacity each year in 2024 and 2025 show a commitment to meeting the growing demand for advanced packaging solutions.
The company's advanced packaging segment is projected to outpace its overall revenue growth, indicating the importance and potential of this market.
TSMC's strategic move to lay the groundwork for 2026 and work closely with suppliers highlights the urgency of the situation and their dedication to meeting customer demand.

At TSMC’s recent earnings call, the atmosphere was charged with a mix of optimism and urgency. The semiconductor giant announced plans to double its CoWoS—short for Chip-on-Wafer-on-Substrate—capacity each year in 2024 and 2025. But here’s the kicker: even with this ambitious expansion, demand is expected to outstrip supply. It’s a classic case of supply chain woes, and it has implications that ripple through the tech industry.

If you’re not familiar with CoWoS, think of it as a sophisticated way to package chips. It’s like stacking layers of technology to create a more powerful and efficient product. TSMC’s advanced packaging segment currently accounts for about 7-9% of its revenue. That might not sound like much, but it’s a growing piece of the pie, and it’s projected to outpace TSMC’s overall revenue growth in the coming years.

Now, you might be wondering, why is this important? Well, as we dive deeper into the world of AI and high-performance computing, the need for advanced packaging solutions is skyrocketing. TSMC has noted that even with its production capacity doubling—aiming for 35,000 to 40,000 wafers per month this year and ramping up to 80,000 next year—customer demand is still outpacing their ability to deliver. It’s like trying to fill a bathtub with a garden hose while someone keeps turning up the faucet.

Interestingly, TSMC has already laid the groundwork for 2026, providing equipment manufacturers with its needs and placing orders. Delivery schedules for next year are nearly booked solid, and the company is in talks with suppliers to fine-tune shipment and installation plans for 2026. It’s a strategic move that speaks volumes about the urgency of the situation.

The original forecast had suggested that the expansion might plateau around 100,000 to 120,000 wafers per month by 2026. However, with major AI players pushing for more capacity, there’s potential for that number to surge to 140,000 or even 150,000 wafers per month. It’s a fascinating example of how demand from one sector can drive innovation and capacity in another.

Moreover, the report sheds light on TSMC’s advanced packaging supply chain. Companies like GPTC and Scientech are key players, providing the wet process equipment necessary for these advanced packaging techniques. Scientech, in particular, has snagged a notable share of CoWoS equipment orders, while GPTC serves as a critical supplier for major packaging and testing companies like ASE and Micron.

So, what does this all mean for the average consumer? As the demand for advanced chips grows, we can expect to see more powerful devices hitting the market in the next few years. Whether it’s faster smartphones, smarter AI, or more efficient data centers, TSMC’s expansion efforts are likely to play a crucial role in shaping the tech landscape.

In a world where technology evolves at breakneck speed, TSMC’s ability to keep pace with demand could very well determine the next wave of innovation. Are we ready for what’s coming next? Only time will tell, but one thing is for sure: the tech industry is watching closely.

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Background Information

About TSMC: TSMC, or Taiwan Semiconductor Manufacturing Company, is a semiconductor foundry based in Taiwan. Established in 1987, TSMC is a prominent player in the global semiconductor industry, specializing in the manufacturing of semiconductor wafers for a wide range of clients, including technology companies and chip designers. The company is known for its cutting-edge semiconductor fabrication processes and plays a critical role in advancing semiconductor technology worldwide.

Technology Explained

CoWoS: CoWoS, or Chip-on-Wafer-on-Substrate, is a recent advancement in chip packaging that allows for more powerful processors in a compact size. This technology stacks multiple chips on a silicon interposer, enabling denser connections and improved performance. Developed for high-performance computing, CoWoS promises faster processing, lower power consumption, and the ability to pack more processing power into smaller devices.

Substrate: The technology substrate is a layer of material that provides a foundation for the components of a computer system. It is the foundation upon which the components of a computer system are built. It is usually made of a material such as silicon, which is a semiconductor material. The technology substrate is used to create the circuits and pathways that allow the components of a computer system to communicate with each other. It is also used to create the physical structure of the computer system, such as the motherboard, memory, and other components. The technology substrate is essential for the functioning of a computer system, as it provides the necessary pathways for the components to communicate with each other. It is also used to create the physical structure of the computer system, such as the motherboard, memory, and other components.