TSMC CoWoS Capacity Tightens

According to media reports, Intel is accelerating its push into advanced semiconductor packaging with support from the U.S. government, while outsourced semiconductor assembly and test companies including ASE Technology Holding, Siliconware Precision Industries, Powertech Technology, and King Yuan Electronics are also benefiting from spillover demand for advanced packaging orders.

Demand for advanced packaging has been rising sharply, driven by the rapid growth of artificial intelligence and high-performance computing (HPC) chips. TSMC has continued to expand its CoWoS capacity and has secured strong customer preference for its advanced packaging technologies.

TSMC currently operates five advanced packaging and testing facilities across Taiwan and is constructing an additional site in Chiayi. Market reports also indicate that the company is considering further capacity expansion at the Erlin campus in central Taiwan.

In the United States, TSMC has announced plans to build two advanced packaging facilities in Arizona. The company is currently applying for permits to construct the first facility, which is expected to begin operations before 2029.

Despite these expansion efforts, TSMC’s CoWoS capacity remains in tight supply. In mid-June, TSMC signed a 10-year agreement with Amkor Technology, under which TSMC will procure advanced packaging and testing services from Amkor.

Industry analysts noted that major AI chipmakers and cloud service providers are actively developing second-source supply chains to improve resilience against geopolitical risks and capacity constraints. This strategy is intended to diversify manufacturing risk and create a more flexible production network.

For TSMC, analysts believe its technological advantages in advanced packaging, including SoIC and CoWoS process advancements, remain strong. Because short-term capacity is unlikely to fully meet global market demand, allowing some lower-end or standardized packaging orders to flow to external partners may enable TSMC to focus its core resources on higher-value advanced packaging technologies.