The global advanced packaging market has strong prospects, with the Industrial Technology Research Institute (ITRI) predicting that the global advanced packaging market share will reach 51% by 2025, surpassing traditional packaging for the first time. By 2028, the advanced packaging market is expected to achieve a compound annual growth rate of 10.9%.
TSMC Chairman Mark Liu recently stated that demand for advanced packaging from clients far exceeds supply. Although TSMC has more than doubled its CoWoS advanced packaging capacity this year compared to last, it remains in short supply, with CoWoS capacity expected to continue doubling through 2025.
In terms of capacity expansion, TSMC is not only investing in Taiwan but also collaborating with testing and packaging giant Amkor at its Arizona facility to expand InFO and CoWoS advanced packaging, meeting AI-related client demand.
Investment banks report that, in addition to major AI chip companies like NVIDIA, Broadcom, AMD, and Intel, cloud service providers such as Microsoft, Amazon, and Google are also actively developing proprietary AI chips (ASICs), further increasing demand for TSMC's CoWoS capacity.
In terms of capacity, investment banks estimate that by the end of this year, TSMC's CoWoS monthly capacity could exceed 32,000 units, with the combined capacity from ASE Technology and Amkor nearing 40,000 units. This year, NVIDIA's CoWoS demand accounted for over 50% of total supply, with Broadcom and AMD together accounting for over 27.7%. NVIDIA's capacity demand is expected to still account for 50% of overall CoWoS supply in 2025, while AMD's orders for TSMC's CoWoS packaging are projected to see a slight increase.
Looking to 2025, investment banks estimate that CoWoS monthly capacity could soar to 92,000 units, with TSMC's CoWoS monthly capacity reaching 80,000 units by the end of 2025. Taiwanese analysts are optimistic that CoWoS monthly capacity could reach 100,000 units next year.
Market research firm TrendForce noted that NVIDIA is a major driver of CoWoS demand, and demand is expected to increase significantly by 2025 as production of its Blackwell chip series ramps up.
In terms of pricing trends, investment banks expect TSMC's CoWoS prices to increase by more than 10% by 2025.
TSMC indicated that advanced packaging represents a high single-digit percentage (around 7% to 9%) of TSMC's overall revenue, with related gross margins gradually improving. Analysts project TSMC's advanced packaging revenue to exceed $7 billion this year, potentially reaching $8 billion.