AI Supply Chain Disruption Looms as TSMC’s CoWoS Packaging Demand Soars to Unprecedented Heights

TSMC’s CoWoS technology and other advanced packaging solutions may soon experience significant production challenges due to a major Japanese supplier scaling back operations on a crucial component.

Potential Production Disruptions for TSMC’s CoWoS Amid Surging Demand

The CoWoS (Chip-on-Wafer-on-Substrate) packaging technology developed by TSMC has become essential in the evolution of high-performance AI hardware, particularly in products like NVIDIA’s accelerators. This innovative approach allows manufacturers to stack multiple chiplets, thus enhancing performance. However, recent reports suggest that the AI supply chain might be nearing saturation, potentially impacting advanced packaging production. According to Taiwan Economic Daily, Asahi KASEI, a reputable Japanese supplier of photosensitive polyimide (PSPI) crucial for advanced packaging, plans to reduce its output to address overwhelming demand.

Asahi KASEI’s decision to focus its PSPI supply on current clients could have significant ramifications. The company plays a pivotal role in the AI supply chain and is integral to technologies like CoWoS. Any reduction in their supply may lead to observable delays within the market, potentially forcing companies such as NVIDIA to adjust their pricing or further postpone production timelines.

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The pressing question remains: How will this reduction impact TSMC and its CoWoS technology? Asahi has established itself as one of TSMC’s most vital partners, and their collaboration has strengthened over time. This close relationship suggests that Asahi may prioritize TSMC’s orders amid the impending supply constraints. Furthermore, other advanced packaging companies like ASE Technology, Samsung, and Intel could face disruptions as well. While they may not be directly involved in the mainstream supply chain, any hiccup in the process could lead to delays impacting a range of AI products.

NVIDIA’s CEO, Jensen Huang, has emphasized the company’s exclusive reliance on TSMC’s CoWoS technology, indicating no intention to switch to alternative suppliers. Given this unwavering dependence combined with skyrocketing demand, it will be crucial to observe how TSMC navigates these potential supply chain hurdles.

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