[News] TSMC's CoWoS Prices Could Rise 20%; ASE and Amkor compete for outsourcing contracts

Due to booming demand for AI chips, TSMC's advanced CoWoS (chip on wafer on substrate) packaging is facing a significant supply shortage. In response, TSMC is expanding its production capacity and considering price increases to maintain supply chain stability.

According to a recent Morgan Stanley report cited by Commercial Times, TSMC has received approval from NVIDIA to increase prices next year, with CoWoS packaging expected to increase by 10% to 20% depending on capacity expansion.

During TSMC's third quarter earnings conference call, CEO CC Wei emphasized that customer demand for CoWoS far exceeds supply. Despite TSMC's plan to more than double CoWoS capacity in 2024 compared to 2023, supply constraints remain.

To meet demand, TSMC is working closely with packaging and testing companies to expand CoWoS capacity. Industry sources cited by CNA show that ASE Group and SPIL are collaborating with TSMC on the back-end CoWoS on-substrate (S oS) process. By 2025, ASE could handle 40-50% of TSMC's outsourced CoWoS S-OS packaging.

ASE announced investments in advanced packaging covering CoWoS (chip on wafer) front end and operating system processes as well as advanced testing.

SPIL, a subsidiary of ASE, recently invested NT$419 million in land in Erlin Park of the Central Taiwan Science Park, increasing CoWoS capacity. In addition, SPIL has allocated NT$3.702 billion to acquire land from Ming Hwei Energy in Douliu, Yunlin for further expansion.

ASE also announced in early October that its new Kaohsiung K28 facility, scheduled for completion in 2026, will expand CoWoS capacity.

In early October, TSMC announced a partnership with Arizona-based Amkor to expand InFO and CoWoS packaging capabilities. Industry sources cited by CNA suggest that Apple, a user of TSMC's US-based 4nm application processor process, could leverage Amkor's CoWoS capacity. Other US-based AI customers leveraging TSMC's advanced nodes for ASICs and GPUs are also expected to consider Amkor's CoWoS packaging in the future.

(Image credit: TSMC)