The AI industry is facing a significant challenge with advanced packaging, as NVIDIA secures a major portion of TSMC’s CoWoS capacity. This move is poised to impact how resources are allocated in the coming years, with NVIDIA at the forefront.
NVIDIA’s Strategic Move
NVIDIA is projected to claim over half of TSMC’s CoWoS capacity by 2026. This allocation is crucial for the ongoing Blackwell Ultra ramp-up and the upcoming Rubin architecture. Reports suggest that NVIDIA has reserved between 800,000 to 850,000 wafers for 2026, overshadowing competitors like Broadcom and AMD.
Despite outsourcing efforts, TSMC aims to maintain its dominance in CoWoS capacity, with NVIDIA, Broadcom, and AMD as leading customers. The orders do not yet account for potential demand from China for NVIDIA’s H200 AI chips, indicating that capacity constraints could tighten for TSMC and its competitors.
Expansion and Challenges at TSMC
TSMC is investing in its advanced packaging capabilities, notably with the expansion of its Chiayi AP7 plant and two planned facilities in Arizona. The anticipated increase in US production by 2028 is expected to bolster capacity, though supply constraints will persist.
ASICs and the AI Landscape
The shift towards inference-focused solutions in AI is highlighting the role of ASICs, with Google’s TPUs gaining momentum. However, mass production for external uses remains an issue. As NVIDIA secures a substantial portion of TSMC’s CoWoS capacity, it sets the stage for significant developments in AI hardware innovation.