TSMC CoWoS Struggles, Packaging Firms Expand
Experts in the Chinese-Taiwanese market observe a significant uptick in demand for AI chips, fueling advancements in packaging technology. TSMC aims to double its monthly capacity for CoWoS packaging this year, although the supply remains constrained. Noteworthy semiconductor backend specialized testing and packaging subcontractors (OSATs) including Amkor Technology, Inc., ASE Technology Holding Co., Ltd (ASE), and King Yuan Electronics Co. (KYEC) are strategically increasing their capital expenditures in 2024 to expand their advanced packaging capacities.
Insiders reveal that NVIDIA has extended support to companies like Amkor and ASE. Amkor has gradually ramped up its capacity since the fourth quarter of 2023, while KYEC's subsidiary, Siliconware Precision Industries Co. (SPIL), is slated to commence supplies in the first quarter of this year.
ASE is poised to register a substantial capital expenditure increase by 40% to 50% this year compared to the previous year, allocating 65% of it to packaging, particularly in advanced packaging projects. Tien Wu, CEO of ASE, notes that the revenue share from advanced packaging and testing will be higher this year, with the income from high-end advanced packaging related to AI expected to double, reaching at least $250 million. Analysts estimate that ASE's total capital expenditure this year could surpass $2.1 billion, with a potential to reach $2.25 billion, marking a new record since its establishment.
Beyond Taiwan, ASE is expanding its advanced packaging capacity in overseas locations such as Penang, Malaysia. The Penang facility, operational since late January, primarily focuses on copper bridging and image sensor packaging, with plans to further expand into advanced packaging. The annual revenue of the Penang facility is estimated to be around $350 million, and it is projected to double to $750 million in 2 to 3 years.
Semiconductor testing and packaging company Powertech Technology Inc. is also scaling up its advanced packaging capacity. Chairman Cai Dugong mentions an active increase in capital expenditures in the second half of the year, possibly reaching NT$10 billion to address the demand for advanced technology packaging like High Bandwidth Memory (HBM). Powertech Technology Inc. is primarily focusing on the fan-out on substrate packaging technology, integrating ASIC chips and HBM, with mass production expected from the fourth quarter of this year to the first half of the next year.
Wafer testing company KYEC is positioning itself to meet the demand for advanced packaging after CoWoS. The expected expansion of related capacity is more than double this year, with an anticipated 10% contribution to the company's AI-related performance. Currently, KYEC is constructing Copper Pillar 3 factory, expected to start production in the second half of the year, and planning ahead for the construction of Copper Pillar 4 factory, preparing for production in 2025.
Additionally, testing and packaging company Winstek Semiconductor Co., Ltd. has recently secured two new customers for high-speed computing chips. It is actively building capacity to address the growing demand for AI, and its 3nm chip advanced packaging is set to enter mass production.
