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DIGITIMES: CoWoS capacity utilization reportedly only 60% amid AI boom, supply chain on alert

J

jiakun0618

New member

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CoWoS capacity utilization reportedly only 60% amid AI boom, supply chain on alert​

Monica Chen, Hsinchu; Charlene Chen, DIGITIMES Asia Tuesday 5 August 2025

Reports have emerged that TSMC's advanced packaging technology, CoWoS, is operating at only 60% capacity utilization. Such a supply-demand mismatch has confused the supply chain.

Capacity distribution and expansion plans​

TSMC's CoWoS advanced packaging capacity is primarily distributed across multiple fabs in Taiwan. Additionally, expansion and retrofitting efforts are underway at the former Innolux AP8 fab in the Southern Taiwan Science Park (STSP).

The newest and largest advanced packaging site is the Chiayi AP7 fab, planned to house eight facilities, but not focused mainly on CoWoS. Instead, P1 is dedicated to Apple's WMCM line, P2 and P3 focus on SoIC, and panel-level packaging "CoPoS" is tentatively scheduled for P4 or P5, targeting mass production in the first half of 2029.

Projected capacity growth​

Previous estimates indicate that TSMC(2330.TW) has accelerated CoWoS packaging capacity expansion in recent years, with over half of this capacity allocated to Nvidia. Other ASIC chip customers like AMD have also increased wafer starts. Monthly capacity is projected to reach between 65,000 and 75,000 units by the end of 2025, rising to around 100,000 units by the end of 2026. Expansion drivers include the AP8 fab and upcoming expansions at US-based AP9 and AP10 fabs.

Supply chain implications​

Supply chain insiders suggest this situation may stem from TSMC's rapid expansion outpacing actual demand or possible short-term adjustments in wafer starts from Nvidia and other ASIC clients.

While AI demand remains strong and TSMC maintains a positive long-term outlook on AI growth, there is evidence of restrained spending on CoWoS equipment procurement behind the scenes. After fulfilling existing order books, which typically cover six months to a year, advanced packaging suppliers may see a deceleration in new orders.

Industry sources note that equipment vendors often serve as lagging economic indicators. For example, during the initial AI demand surge, TSMC repurposed the InFO production line at Longtan to produce CoWoS at STSP because some equipment could be shared. However, due to uncertainty regarding long-term AI demand, initial equipment orders were modest. It was only during the second wave of demand acceleration that TSMC placed substantial follow-up orders, significantly boosting equipment vendor sales.

If the reported 60% CoWoS capacity utilization rate holds, it suggests that near-term equipment procurement for advanced packaging will likely slow down, pending new order releases tied to upcoming fabs in Chiayi and the US.

www.digitimes.com

CoWoS capacity utilization reportedly only 60% amid AI boom, supply chain on alert

Reports have emerged that TSMC's advanced packaging technology, CoWoS, is operating at only 60% capacity utilization. Such a supply-demand mismatch has confused the supply chain.
www.digitimes.com
 
jiakun0618 said:

View attachment 3457​

CoWoS capacity utilization reportedly only 60% amid AI boom, supply chain on alert​

Monica Chen, Hsinchu; Charlene Chen, DIGITIMES Asia Tuesday 5 August 2025

Reports have emerged that TSMC's advanced packaging technology, CoWoS, is operating at only 60% capacity utilization. Such a supply-demand mismatch has confused the supply chain.

Capacity distribution and expansion plans​

TSMC's CoWoS advanced packaging capacity is primarily distributed across multiple fabs in Taiwan. Additionally, expansion and retrofitting efforts are underway at the former Innolux AP8 fab in the Southern Taiwan Science Park (STSP).

The newest and largest advanced packaging site is the Chiayi AP7 fab, planned to house eight facilities, but not focused mainly on CoWoS. Instead, P1 is dedicated to Apple's WMCM line, P2 and P3 focus on SoIC, and panel-level packaging "CoPoS" is tentatively scheduled for P4 or P5, targeting mass production in the first half of 2029.

Projected capacity growth​

Previous estimates indicate that TSMC(2330.TW) has accelerated CoWoS packaging capacity expansion in recent years, with over half of this capacity allocated to Nvidia. Other ASIC chip customers like AMD have also increased wafer starts. Monthly capacity is projected to reach between 65,000 and 75,000 units by the end of 2025, rising to around 100,000 units by the end of 2026. Expansion drivers include the AP8 fab and upcoming expansions at US-based AP9 and AP10 fabs.

Supply chain implications​

Supply chain insiders suggest this situation may stem from TSMC's rapid expansion outpacing actual demand or possible short-term adjustments in wafer starts from Nvidia and other ASIC clients.

While AI demand remains strong and TSMC maintains a positive long-term outlook on AI growth, there is evidence of restrained spending on CoWoS equipment procurement behind the scenes. After fulfilling existing order books, which typically cover six months to a year, advanced packaging suppliers may see a deceleration in new orders.

Industry sources note that equipment vendors often serve as lagging economic indicators. For example, during the initial AI demand surge, TSMC repurposed the InFO production line at Longtan to produce CoWoS at STSP because some equipment could be shared. However, due to uncertainty regarding long-term AI demand, initial equipment orders were modest. It was only during the second wave of demand acceleration that TSMC placed substantial follow-up orders, significantly boosting equipment vendor sales.

If the reported 60% CoWoS capacity utilization rate holds, it suggests that near-term equipment procurement for advanced packaging will likely slow down, pending new order releases tied to upcoming fabs in Chiayi and the US.

www.digitimes.com

CoWoS capacity utilization reportedly only 60% amid AI boom, supply chain on alert

Reports have emerged that TSMC's advanced packaging technology, CoWoS, is operating at only 60% capacity utilization. Such a supply-demand mismatch has confused the supply chain.
www.digitimes.com
Click to expand...

"Reports have emerged that TSMC's advanced packaging technology, CoWoS, is operating at only 60% capacity utilization. "

"If the reported 60% CoWoS capacity utilization rate holds, it suggests that near-term equipment procurement for advanced packaging will likely slow down, pending new order releases tied to upcoming fabs in Chiayi and the US."


This article confused me. I checked the search results online, and it's the only one that mentions this 60% CoWoS utilization. So the phrase 'Reports have emerged' is essentially referring to itself. The article is basically citing itself as the source.
 
Among all other advanced packaging services, the prices are very high.

Every OSAT expects expensive chips going their way, and keeps prices high.

They are risking to lose market just to lock in a few fat cat clients making those super expensive chips.

It's a bit like a real estate market in really expensive cities: no one actually makes a lot of sales, everyone is expecting a "whale" client to come their way, and buy that ridiculous mansion apartment they kept on sale for all eternity.
 
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That is not what TSMC has been saying on investor calls. Does anyone know about the status of the 2 packaging facilities they are building in AZ? It really is hard to believe given the big Nvidia orders coming though the pipeline. How does TSMC grow 30%+ this year without full CoWos utilization?
 
Daniel Nenni said:
That is not what TSMC has been saying on investor calls. Does anyone know about the 2 packaging facilities they are building in AZ. It really is hard to believe given the big Nvidia orders coming though the pipeline. How does TSMC grow 30%+ this year without full CoWos utilization?
Click to expand...
As soon as I read a line like "reports have emerged", I always think it has to be BS. When was the last time we've seen a really great DigiTimes Asia article? And I agree, TSMC is waaay too smart to have production capacity so far out of synch with customer demand.
 
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