AI boom turns chip packaging into the next semiconductor battleground
NVDA•Rising AI chip demand is making advanced packaging a bottleneck, prompting chip designers, suppliers and equipment makers to expand capacity. Advanced packaging revenue is forecast to exceed traditional packaging revenue for the first time in 2026, with related capital spending expected to approach $28 billion.
1. Capacity under pressure
Advanced packaging has become a critical bottleneck as demand for AI chips outstrips available capacity. TSMC leads in high-end packaging, including CoWoS, which links processors and memory on a shared base. The technology is used by Nvidia, AMD and Broadcom, as well as cloud companies developing their own AI chips.
2. Investment beyond TSMC
Nvidia is providing billions of dollars in financing to expand CoWoS capacity at Siliconware Precision Industries, a unit of ASE Technology, an industry executive said. Taiwan's Powertech Technology is pursuing panel-level packaging and is working with AMD and Broadcom on the technology. Powertech plans to invest $400 million in an advanced packaging joint venture with Broadcom in Singapore, with production potentially beginning in 2028.
3. New formats and tools
TSMC is developing panel-based CoPoS packaging and said in April it had built a pilot line, with production expected to begin within a couple of years. AMD has announced more than $10 billion in investments across Taiwan's semiconductor industry, including advanced-packaging partnerships. Equipment makers are also targeting the market; Yole Group forecasts advanced-packaging capital spending will near $28 billion in 2026.
