TSMC Expands Outsourcing of Key Packaging Step CoW… Expected to Ease AI Chip Manufacturing Bottleneck
TSMC is expanding outsourced production of a major process step for artificial intelligence (AI) chips. The move is seen as a step toward resolving the bottleneck in AI chip manufacturing. Much of the volume TSMC had been handling in-house is set to go to outsourced semiconductor assembly and test (OSAT) firms, and a large-scale wave of equipment investment is expected to follow.
According to industry sources on the 4th, TSMC has decided to place additional CoW (chip-on-wafer) packaging volume — part of the CoWoS process used to manufacture AI chips — with ASE and other OSAT providers. In response, major OSAT companies are moving ahead with equipment orders to build new production lines. Purchase order (PO) discussions are also reportedly underway with Korean materials, components, and equipment suppliers. The specific investment scale has not been disclosed, but capacity is expected to be expanded substantially versus current levels.
CoWoS is TSMC's 2.5D packaging technology, used in building AI chips. A processor (SoC) for AI workloads, such as a GPU, sits at the center with high-bandwidth memory (HBM) placed around it, and an intermediate substrate called an interposer is used to connect the two.
TSMC refers to the step of attaching the chips to the interposer as CoW, and the step of bonding that interposer to the main substrate as WoS (wafer-on-substrate).
Until now, TSMC has mainly outsourced WoS, the bonding to the main substrate. ASE, Amkor, and SPIL have been producing it under technology licenses from TSMC. Some CoW work was also outsourced, but only in limited volumes.
The decision to significantly expand CoW outsourcing this time is attributed to the persistent bottleneck in AI chip manufacturing. Demand has surged as not only global AI chip designers (fabless firms) led by Nvidia, but also AI data center operators, move to develop and deploy their own custom silicon.
TSMC is estimated to hold roughly 90% of the global AI chip manufacturing market. With demand continuing to grow and TSMC's own capacity insufficient to meet it, the company is looking to increase outsourcing.
"TSMC has continued to invest in packaging capacity for AI chip manufacturing, but it is still being criticized for bottlenecks at the packaging stage," an industry official said. "This expansion of outsourcing is an attempt to scale up capacity together with its key OSAT partners, as market demand keeps expanding."
As OSATs receiving CoW volume from TSMC ramp up equipment investment, back-end materials, components, and equipment suppliers are also expected to benefit. Investment is seen concentrating in particular on dicing — cutting wafers and interposers — and on the bonding processes that join wafers to interposers.
According to multiple sources in the Korean equipment industry, discussions on supplying CoW-related tools are underway in the laser processing and bonding segments.
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