TSMC Boosts CoWoS Capacity to 17,000 Wafers/Month in Q1

Industry reports indicate that, despite recent speculation in the market regarding a reduction in NVIDIA's 2024 orders with TSMC, TSMC remains committed to expanding its CoWoS packaging capacity.

Recent market discussions suggest a decline in NVIDIA's revenue in mainland China, with other markets struggling to bridge the significant demand gap in China. Furthermore, the anticipated launch of the next-generation GPU, HGX H200, replacing H100, is scheduled for the second quarter, with sales anticipated to rise in the third quarter. Adjustments are being made to customer orders for both the existing H100 and the upcoming H200 chips, introducing an element of uncertainty.

Rumors suggest that, due to these uncertainties, NVIDIA has taken the unprecedented step of reducing its orders for TSMC's anticipated 4nm process and CoWoS packaging capacity.

Manufacturers of wafer equipment highlight that TSMC's available CoWoS capacity is insufficient to meet the prevailing demand. Insiders note that, despite TSMC's proactive efforts to expedite equipment upgrades, the projected monthly production capacity for CoWoS stands at 15,000 wafers by the close of 2023.

It is noteworthy that TSMC is currently modifying certain InFO (Integrated Fan-Out) equipment to facilitate CoWoS production. This equipment continues to handle the majority of advanced packaging shipments, with the monthly capacity for CoWoS packaging expected to reach 17,000 wafers in the first quarter of 2024.

Insiders suggest that TSMC is strategically allocating additional fab capacity to CoWoS production, resulting in a quarterly increase in CoWoS packaging capacity throughout 2024, ultimately reaching 26,000-28,000 wafers.

The shortage of NVIDIA AI GPUs is attributed to the limited capacity of TSMC's CoWoS packaging.

In response to demands from numerous customers, TSMC initiated the urgent allocation of capacity in the second quarter of 2023. Delivery times for new CoWoS equipment exceed six months, with some equipment requiring up to 10 months from order placement to production installation. Notwithstanding, companies such as Quanta Computer, Wistron, Supermicro, Gigabyte, ASUS, and others report having orders but face challenges in fulfillment, highlighting a persistent CoWoS supply gap.

Industry sources reveal that approximately half of TSMC's available CoWoS packaging capacity is dedicated to meeting the demand for NVIDIA's AI GPUs. This underscores confidence in the forthcoming release of the H200 and B100 GPUs, scheduled for later this year. The 3nm B100 series is expected to ship by the end of 2024.

NVIDIA's strategic plans for 2024 include the release of lower-spec custom AI chips in the second quarter, while the high-end H100 GPU continues to experience robust global demand and shortages.

TSMC has committed to a substantial increase in CoWoS packaging capacity in 2024. Insiders indicate that, beyond NVIDIA, AMD has also heightened its demand for TSMC's CoWoS packaging, driven by the adoption of the MI300 AI GPU series by Microsoft and other customers. Additionally, Broadcom has pre-paid CoWoS capacity fees.