Capacity gap up to 20, HPC orders are strong, and TSMC is urgently expanding production

    Previously, it was reported that due to strong orders from HPC customers such as Nvidia, the capacity of advanced packaging CoWoS of TSMC was tight, and the gap was up to 10% to 20%. The customer asked TSMC to expand its CoWoS capacity. TSMC has also confirmed that due to the sudden increase in demand for AI orders, the demand for advanced packaging is far greater than the existing capacity, and it is now forced to urgently increase production capacity.

    In fact, the supply of AI GPUs is currently in short supply, and the main bottleneck is CoWoS packaging. As an advanced packaging technology, CoWoS was originally used in Niche market such as high-speed computing. Its main customers were Nvidia, Google, AMD and Amazon. The cost was high, with about $4000 to $6000 per wafer, much higher than the $600 of TSMC‘s other packaging technology, InFO. Nowadays, CoWoS has become a widely used packaging technology in the fields of HPC and AI computing, with the vast majority of high-performance chips using HBM, including most AI training chips from startups.

    As for the shortage of GPUs, semiconductor equipment manufacturers also said that Nvidia and TSMC had previously estimated that the annual production capacity and orders were quite conservative. They did not expect the demand for HPC chips such as AI GPU to erupt. The CoWoS wet process advanced packaging equipment, which had not much production capacity, was difficult to meet. And the delivery time for some packaging equipment and components can be as long as 3-6 months, and the new production capacity can only be gradually put in place by the end of the year at the earliest. In other words, there will be a shortage situation in the next six months, and it is rare to see TSMC placing urgent orders and not bargaining in the near future.

    For TSMC, the expansion of CoWoS production is the current focus. Recently, industry sources also reported that due to the high demand for CoWoS, TSMC pursued orders from equipment manufacturers at the end of June, requesting suppliers to fully shorten delivery time support. It is expected that there will be a peak of a large number of shipments from the fourth quarter of this year to the first quarter of next year.

    An equipment manufacturer said that TSMC‘s advanced packaging capacity is dominated by InFO, and its main customer is Apple. Driven by Nvidia‘s massive investment, CoWoS‘s capacity will start to rise significantly in the second quarter of 2023. It is estimated that TSMC‘s capacity will be at least 120000 pieces in 2023, and will expand to nearly 175000~200000 pieces in 2024. Nvidia will contract 40% of its capacity in advance.

    In 2023, the second and third largest customers will be Broadcom and Xilinx respectively. It is worth mentioning that, in addition to AMD‘s MI300 series launched in the fourth quarter, the order size will rank among the top five, Amazon and TSMC will have closer relations, and will be the third largest CoWoS customer in 2024.

    *Disclaimer: The information in this article originates from the DigiTimes and Mantianxin, and is collated by Huaqiang Microelectronics. The information has not been officially confirmed, and is only for exchange and learning.