TSMC Boosts Capacity by 120%, Intel, Samsung, and UMC in Full Force

November 13th News: In response to the sustained and robust demand for AI chips, the advanced packaging market is experiencing significant growth. Key semiconductor industry leaders, including TSMC, Intel, and Samsung, are intensifying efforts to expand production capacity. United Microelectronics Corporation (UMC) recently announced a strategic alliance with industry partners, such as Chipbond, Nanya, and JCET, to bolster its presence in the thriving advanced packaging sector. This strategic move has resulted in a notable increase in service providers within the advanced packaging industry, setting the stage for heightened market competition.

Industry analysts attribute this growth to the escalating demand for AI, particularly in generative AI and large language models (LLMs). Major technology players such as Microsoft, Amazon, Google, Apple, Alibaba, and Baidu are making substantial investments in AI, driving a considerable need for AI chips. The current bottleneck in AI chip production lies in advanced packaging capabilities, prompting industry players to proactively expand these capabilities.

Traditionally, AI computations heavily relied on GPU processing, with signals transmitted to GPU-adjacent DRAM (GDDR) memory through high-speed interfaces for data storage or caching. However, the increasing emphasis on real-time AI computations has led to the adoption of advanced packaging stacking techniques. This involves stacking AI processors with high-bandwidth memory (HBM), significantly reducing signal transmission distances and enhancing AI processor processing speeds. This shift has become a pivotal factor driving the substantial growth of the advanced packaging market.

TSMC, an early adopter of CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging since 2011, has experienced a significant uptick in demand since the AI market explosion last year. TSMC has made the strategic decision to expand its CoWoS advanced packaging capacity to meet the growing demand, planning a monthly capacity increase of about 20%, resulting in an overall growth of 120% to reach 35,000 units.

Reports indicate that after NVIDIA's recent expansion order in October, heavyweight customers such as Apple, AMD, Broadcom, and Marvell are also placing additional orders with TSMC. To meet the demands of these major clients, TSMC is accelerating the expansion of its CoWoS advanced packaging capacity. NVIDIA currently dominates TSMC's CoWoS advanced packaging, utilizing nearly 60% of the related production capacity for its H100 and A100 AI chips. Additionally, AMD's latest AI chip, the MI300, is currently in production and is expected to be released next year, using both SoIC and CoWoS advanced packaging.

Furthermore, AMD's subsidiary, Xilinx, is a major customer for TSMC's CoWoS advanced packaging, and with the sustained growth in AI demand, both Xilinx and Broadcom are increasing their orders for CoWoS advanced packaging from TSMC.

Apart from TSMC's significant expansion in advanced packaging capacity, semiconductor giants Intel and Samsung are also investing in this area. Samsung has introduced services like I-Cube and X-Cube in hopes of attracting customers. The industry believes that Samsung's major advantage lies in its memory production technology, making it a formidable competitor for TSMC in securing orders.

Intel, on the other hand, is expected to enter mass production with its latest advanced packaging services in 2026. Unlike other companies focusing on silicon-based intermediate layer technology, Intel has chosen to use glass substrates for mass production. However, this approach may have higher costs, and as of now, only STMicroelectronics has established a small-scale production line using this technology, resulting in limited suppliers and potential equipment shortages.

UMC is optimistic about the opportunities in the advanced packaging market and has recently announced its entry into this sector alongside partners such as Chipbond, Nanya, and JCET. After completing system-level verification next year, UMC plans to commence offering advanced packaging services. This strategic move positions UMC as an emerging player in the competitive advanced packaging market.