TSMC is investing heavily in CoWoS packaging, with plans to expand production in Taiwan and introduce the technology to Japan.
According to Taiwan Economic Daily, TSMC will increase investment in a new advanced packaging plant in the Chiayi Science Park. The park will allocate six new plant sites to TSMC, two more than originally expected four, with a total investment of over NT $500 billion (approximately 113.7 billion RMB). The main focus will be on expanding CoWoS advanced packaging capacity. Relevant environmental impact assessments and hydropower facilities have been completed and processed, and are expected to be announced to the public in early April.
Currently, TSMC's CoWoS production capacity is entirely located in Taiwan. According to the latest Reuters report, informed sources have revealed that TSMC is considering building advanced chip packaging capacity in Japan, and one option is to introduce its CoWoS packaging technology to Japan. The review process is still in its early stages and a decision has not yet been made on the scale or timeline of potential investments.
CoWoS is a high-precision packaging technology that involves stacking chips together to improve processing power, while saving space and reducing power consumption. With the booming development of artificial intelligence, the global demand for advanced semiconductor packaging has surged.
The main reason for TSMC's large-scale expansion of production is due to the shortage of advanced packaging. Morgan Stanley previously stated that the current supply of advanced process capacity is in short supply, and the penetration rate of advanced packaging is expected to maintain a high growth rate with the explosive demand for AI computing chips. At the same time, the penetration rate of advanced packaging for end-to-end computing chips is also rapidly increasing. According to Morgan Stanley's calculations, the global CoWoS production capacity is expected to reach 14000 pieces per month in 2023 and 32000 pieces per month in 2024.
TSMC CEO Wei Zhejia stated in January that the company plans to double CoWos production this year and further increase in 2025.
It is worth noting that this round of investment is expected to trigger a new wave of equipment procurement. Previously, TSMC resumed placing orders for CoWoS devices in April 2023, with the second and third waves of additional orders falling in June and October of last year, followed by sporadic increases. In March of this year, there has been a new wave of active pursuit, and the delivery time is expected to be in the fourth quarter of this year. The market originally expected TSMC's CoWoS monthly production capacity to reach 32000-35000 pieces by the end of 2024, but now it is expected to exceed 40000 pieces.
According to the latest report from Taiwan Economic Daily, the main orders fall on CoWoS related equipment factories such as Wanrun, Hongsu, and Xinyun. The equipment manufacturers exclaim, "I work overtime every day, there are too many orders!"
Among them, Wanrun has entered the TSMC 2.5D/3D advanced packaging supply chain and is a major supplier of CoWoS dispensing machines and automatic optical inspection; Xin Yun is one of the qualified suppliers of advanced packaging for wafer foundries. According to the supply chain, TSMC has expanded its production of advanced packaging, and Xin Yun has taken the lead in obtaining most orders from its peers; Hongsu is a manufacturer of semiconductor wet process equipment, not only a supply chain partner of TSMC, but also a supply chain partner of the world's top six packaging and testing plants such as Sun and Moon.