TSMC's advanced packaging orders are booming. Industry sources say that NVIDIA's latest Blackwell architecture GPU chip has strong demand, and has already booked more than 70% of TSMC's CoWoS -L advanced packaging capacity this year. Shipments are rising quarter by quarter with a quarterly increase of more than 20%, contributing to TSMC's hot operation.

TSMC did not respond to related rumors. Industry analysts believe that NVIDIA will release its last quarter's financial report and outlook after the U.S. stock market closes on the 26th. With NVIDIA's large-scale booking of TSMC's advanced packaging capacity, it means that its AI chip shipments will continue to increase this year, and the four major cloud service providers (CSPs) will continue to have strong momentum to pull goods, which is a good news for NVIDIA's earnings conference in advance.

Legal persons are optimistic that as the United States pushes the Stargate plan, it will drive a new wave of AI server construction demand, and NVIDIA will have the opportunity to chase TSMC again.

TSMC Advanced Packaging

TSMC is optimistic about advanced packaging orders. Chairman Wei Zhejia has publicly stated at the January earnings conference that it is continuing to expand advanced packaging capacity to meet customer needs. According to TSMC statistics, advanced packaging revenue will account for about 8% in 2024, and will exceed 10% this year, with a goal of gross profit margin exceeding the company's average level.

The supply chain revealed that after the mass production of the Blackwell architecture, Nvidia will gradually stop production of the previous generation Hopper architecture H100/H200 chips, and the generational change time point will be the middle of this year.

Legal persons explained that although Nvidia's Blackwell architecture chips are still produced using TSMC's 4nm, they will be developed into B200/B300 dedicated to high-speed computing (HPC) and the consumer RTX50 series, and in B200/B300, they will begin to switch to CoWoS-L advanced packaging that combines a redistribution layer (RDL) and a part of the silicon interposer (LSI).

CoWoS-L advanced packaging not only expands the chip size and area and increases the number of transistors, but also allows more high-bandwidth memory (HBM) to be stacked, which upgrades high-speed computing performance. In terms of performance, yield and cost, it is superior to the previous CoWoS-S and CoWoS-R advanced packaging technologies, becoming the main selling point of B200/B300. For this reason, Nvidia has aggressively grabbed TSMC's huge production capacity of CoWoS-L advanced packaging this year.

TSMC's new CoWoS production capacity expanded this year is gradually opening up. It is expected that the Blackwell architecture chips mass-produced by Nvidia will grow rapidly this year at a rate of more than 20% per quarter. In total, Nvidia has taken over more than 70% of TSMC's CoWoS-L production capacity, and it is estimated that the annual shipments will exceed 2 million.

Could TSMC's advanced packaging go to the US?

In response to Donald Trump's tariff policy, foreign media pointed out that TSMC may move some of its advanced packaging production capacity to the United States. Scholars analyzed today (12th) that the United States hopes to obtain a complete wafer production chain, and advanced packaging is an indispensable link. In addition, the construction cost is lower than that of wafer factories, and TSMC's technology still dominates the world. Even if the operating cost of going to the United States is high, the cost can still be passed on. It is indeed a good option to deal with Trump's requirements in the short term.

US President Trump has frequently named tariffs on chips. It is generally expected that the United States will impose tariffs on Taiwan's semiconductors. TSMC, the leading wafer foundry, will hold its first overseas board of directors in Arizona, the United States on the 12th. On the eve of the board meeting, US Vice President JD Vance pointed out at the Paris AI (Artificial Intelligence) Action Summit that he would ensure that the most powerful AI systems would be built in the United States and use chips designed and manufactured in the United States. This speech also made the outside world pay more attention to whether TSMC will make a decision to expand investment in the United States at the board meeting.

Foreign media have pointed out that TSMC may announce the construction of advanced packaging capacity in the United States to respond to Trump's policy. In this regard, Liu Peizhen, director of the Industrial Economic Database of the Taiwan Institute of Economics, said on the 12th that the US hopes to have a complete advanced chip production chain, especially when Moore's Law is facing a bottleneck and needs to be broken through by heterogeneous integration. The importance of advanced packaging is increasing. However, after TSMC's advanced process chips are produced in Arizona, the US still need to be sent back to Taiwan for packaging. In order to respond to geopolitical risks, the US will naturally want to establish packaging production capacity in the United States. Liu Peizhen pointed out that compared with the capital expenditure and construction cost of building another wafer fab, the amount of advanced packaging is relatively low, and considering the ability to pass on costs, it is indeed a good way to respond to Trump's policy to move advanced packaging production capacity to the United States. She said: "(Original sound) The cost of production in the United States is still higher than in Taiwan. In fact, TSMC's advanced packaging is still leading compared to Samsung's I-Cube (Interposer Cube), X-Cube (eXtended Cube), and even Intel's EMIB (Embedded Multi-die Interconnect Bridge) or Foveros. Therefore, it still has the ability to transfer and can smoothly transfer, minimizing the impact on TSMC's gross profit margin.

Liu Peizhen said that considering the advancement and mass production of TSMC's most advanced process technology blueprint, even if part of the advanced packaging capacity is moved to the United States in the future, the technical base of various most advanced processes and packaging will still be Taiwan.

Source: Content from Economic Daily

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