TSMC Refuses NVIDIA’s Demand for Dedicated CoWoS Line Amidst AI Frenzy
Due to the surging demand for artificial intelligence (AI) chips, NVIDIA’s data center GPU sales have been thriving, leading to a significant strain on TSMC’s CoWoS packaging capacity over the past year. Although AI accelerators do not utilize the most advanced semiconductor processes, they heavily rely on advanced packaging technologies. TSMC has chosen to aggressively expand its CoWoS packaging capacity, largely to fulfill NVIDIA’s order requirements.
According to a report by TrendForce, NVIDIA’s founder and CEO, Jensen Huang, visited TSMC headquarters in June this year, meeting with TSMC Chairman and CEO C.C. Wei, as well as TSMC founder Morris Chang. During the meeting, Huang requested that TSMC establish a dedicated CoWoS production line for NVIDIA. However, this request was met with skepticism from TSMC’s senior management, resulting in a moment of tension.
Recently, Mark Liu noted that AI has generated exceptionally strong demand, and TSMC has yet to fully balance supply and demand. The company will continue to expand its capacity. Many clients are eager to use advanced processes to manufacture their chips, requiring TSMC to carefully balance pricing and capacity. Simultaneously, TSMC is adjusting the profit margins of its CoWoS packaging to better align with the company’s average profitability levels.
Currently, TSMC operates five advanced packaging and testing plants located in Hsinchu, Central Taiwan Science Park, Southern Taiwan Science Park, Longtan, and Zhunan. The AP6 facility in Zhunan, which commenced operations in June 2023, is TSMC’s first fully automated factory to integrate 3D Fabric processes from front-end to back-end manufacturing and testing. After a year of operation, it has become Taiwan’s largest CoWoS packaging base.
Reports indicate that to swiftly enhance CoWoS packaging capacity, TSMC plans to construct another advanced packaging and testing plant in Pingtung, southern Taiwan, with the site selection currently underway.
