CoWoS Crunch: TSMC Plans New Advanced Packaging Plant in Taiwan

Due to the surging demand for artificial intelligence (AI) chips, NVIDIA’s data center GPU sales have been booming, resulting in a significant strain on TSMC’s (Taiwan Semiconductor Manufacturing Company) CoWoS (Chip-on-Wafer-on-Substrate) packaging capacity over the past year. Although AI accelerators do not currently utilize the most advanced processes, these products heavily depend on cutting-edge packaging technology, making their supply contingent upon TSMC’s advanced packaging capacity.

According to Trendforce, to swiftly enhance CoWoS packaging capacity, TSMC plans to establish a new advanced packaging and testing plant in Pingtung, southern Taiwan. The site selection process is currently underway, and TSMC has yet to respond to these new rumors.

To meet market demands, TSMC has been actively expanding its capacity by continuously building new advanced packaging facilities. This year, TSMC aims to more than double its capacity, with plans for further increases next year. Despite TSMC’s best efforts, it still cannot fully satisfy customer demands at this stage. Previously, TSMC had to resort to outsourcing, transferring some orders to packaging and testing subcontractors.

Currently, TSMC operates five advanced packaging and testing plants located in Hsinchu, Central Taiwan, Southern Taiwan, Longtan, and Zhunan. Among them, the AP6 in Zhunan, which was officially launched in June 2023, is TSMC’s first fully automated factory integrating 3D Fabric front-end to back-end processes and testing. After a year of operation, AP6 has become Taiwan’s largest CoWoS packaging base, with its monthly capacity expected to double in the third quarter of this year, increasing from 17,000 wafers to 33,000 wafers.

Recently, TSMC commenced construction of the P1 advanced packaging plant in Chiayi Science Park, Taiwan. However, construction was abruptly halted when “suspected relics” were discovered during geological drilling. Consequently, TSMC activated emergency protocols and proposed corresponding strategies, including accelerating preparations for the second factory, potentially prioritizing the construction of the P2 plant to avoid delays. It appears TSMC has made additional preparations, with the advanced packaging and testing plant in Pingtung being one of them.