NVIDIA Places Additional Orders for AI Chips, TSMC Urgently Expands Packaging Equipment
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On September 25, news emerged that as demand for NVIDIA's AI chips surges, foundry TSMC is ramping up production capacity. According to Taiwan's Economic Daily, TSMC's CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging capacity is fully booked. Amid aggressive expansion efforts, major clients like NVIDIA have increased their AI chip orders, while urgent orders from AMD and Amazon have also flooded in. As a result, TSMC is urgently procuring additional CoWoS equipment from suppliers, increasing its original expansion target by 30%, highlighting the ongoing boom in the AI market.
Reports indicate that TSMC has sought assistance from equipment manufacturers such as Singulus, Mirle, Hermes-Epitek, Taisic, and GPM to expand CoWoS equipment production. The new equipment is expected to be delivered and installed by the first half of next year. These manufacturers, already busy with TSMC's initial expansion orders, are now handling an additional 30% increase, significantly boosting their revenue for the second half of the year and extending their order visibility into the first half of 2024.
Industry insiders reveal that TSMC's current CoWoS advanced packaging capacity stands at approximately 12,000 wafers per month. After earlier expansion plans aimed to increase this to 15,000–20,000 wafers, the additional equipment will further raise monthly capacity to over 25,000 wafers, potentially nearing 30,000, significantly enhancing TSMC's ability to handle AI-related orders.
The equipment manufacturers involved declined to comment on order specifics. However, sources indicate that as AI computing applications expand—including machine learning, large language model (LLM) training, and AI inference—and find applications in autonomous vehicles and smart factories, demand for AI chips will continue to grow robustly.
The report also notes that major clients like NVIDIA and AMD increased their wafer orders in Q3, boosting TSMC's 7nm and 5nm advanced process utilization rates. However, the CoWoS advanced packaging capacity remains a critical bottleneck in the supply chain.
TSMC CEO C.C. Wei previously stated during an earnings call that the company is actively expanding CoWoS capacity, aiming to alleviate tight supply by the second half of 2024. TSMC has reportedly allocated space in its Hsinchu, Central Taiwan, Southern Taiwan, and Longtan facilities to expand CoWoS production, while its Zhunan packaging plant will also add advanced packaging lines for CoWoS and TSMC SoIC.
Industry sources reveal that TSMC began its large-scale CoWoS expansion in Q2, placing its first equipment orders in May. These are expected to be fully installed by the end of Q1 2024, increasing monthly CoWoS capacity to 15,000–20,000 wafers. Despite these efforts, surging client demand has led TSMC to place additional equipment orders.
Equipment suppliers note that NVIDIA is currently TSMC's largest CoWoS client, accounting for 60% of capacity. Due to strong AI demand, NVIDIA has increased its orders, while AMD, Amazon, and Broadcom have also placed urgent orders. To meet the pressing need for CoWoS capacity, TSMC has placed an additional 30% order, requiring delivery and installation by the end of Q2 2024, with mass production starting in the second half of the year.