TSMC’s Advanced Packaging Capacity Is Tight — NVIDIA Books More Than Half of Next Year’s Output

Key Points

TSMC advanced packaging capacity is the headline every GPU and AI chip buyer needs to read right now.

Key takeaway — packaging, not just wafers, is the choke point

Advanced packaging capacity at Taiwan Semiconductor Manufacturing Company (TSMC (Taijidian 台积电)) is fully booked for next year.

NVIDIA (Yingweida 英伟达) has pre-booked the majority of CoWoS slots, according to market reports.

That leaves limited headroom for other major customers like Broadcom (Botong 博通) and AMD.

NVIDIA books the bulk of TSMC’s advanced-packaging wafers

A DigiTimes report cited by market media says NVIDIA (Yingweida 英伟达) has pre-booked about 800,000 to 850,000 wafers for TSMC’s advanced packaging in 2026.

That volume would represent a very large share of TSMC’s advanced-package wafer output for the year.

The pre-booking dynamics are a reminder that fabs are only one part of supply.

Packaging — especially CoWoS (Chip-on-Wafer-on-Substrate) — is now a strategic bottleneck for high-performance GPU and AI-accelerator supply chains.

Why CoWoS remains the preferred solution — and why capacity is constrained

CoWoS is favored for high-performance GPUs and AI accelerators because it supports:

• Extremely high memory bandwidth.
• Dense interconnects and low inter-chiplet latency.
• Interposer-based layouts that scale well for multi-die GPU designs.

The surge in AI demand — driven by next-gen GPU families such as NVIDIA’s Blackwell Ultra line — is putting heavy pressure on CoWoS capacity.

Advanced packaging requires specialized lines, interposers, substrates and materials, so capacity can’t scale instantly the way front-end wafer fabs sometimes can.

That mismatch between demand and the supply of packaging lines is keeping lead times and pricing elevated.

How TSMC is responding — OSAT partnerships and production footprint expansion

TSMC (Taijidian 台积电) is easing near-term shortages by shifting some workload to third-party OSATs (outsourced semiconductor assembly and test providers).

Named partners include Advanced Semiconductor Engineering (ASE Riyueguang 日月光) and Siliconware Precision Industries (SPIL Xipin 矽品精密).

At the same time, TSMC is investing in new CoWoS-capable facilities in Taiwan and the United States.

TSMC has said mass production from new Arizona plants is expected to start by around 2028.

Even with these expansions, near-term capacity remains tight and pricing pressure is likely to persist.

EMIB emerges as an alternative for some customers

Intel’s (Yingte’er 英特尔) EMIB (Embedded Multi-die Interconnect Bridge) has come back into focus as a heterogeneous-integration alternative.

EMIB can be attractive when customers need:

• Better board-area efficiency for certain multi-chip layouts.
• Lower packaging cost for designs that don’t demand interposer-level peak bandwidth.
• Customized package topologies that avoid CoWoS supply chains.

For GPU and accelerator designs where the absolute top memory bandwidth and the lowest interposer latency aren’t mission-critical, some vendors are evaluating EMIB or other 2.5D/3D approaches.

What this means for the AI chip market — strategic takeaways

The concentration of advanced-packaging capacity booking by a single large customer highlights a few strategic realities for investors, founders, and chip designers.

• Packaging is now a strategic bottleneck. Front-end process leadership is necessary but not sufficient for product delivery at scale.
• Smaller customers face higher risk. Expect longer waits and elevated costs for CoWoS-equipped products if they can’t secure early bookings or OSAT alternatives.
• Design trade-offs will shape adoption. Teams will weigh bandwidth/latency needs versus cost and lead time when choosing between CoWoS, EMIB, and other heterogeneous-integration options.
• Supply-chain diversification will matter. Vendors that hedge across foundries, OSATs, and packaging architectures may reduce time-to-market risk.

For investors, that means paying attention to packaging capacity, OSAT relationships and design wins — not just front-end wafer allocations.

How companies should think about their next moves

If you’re building hardware or investing in AI silicon, consider these practical steps.

• Lock in packaging slots early. Pre-booking packaging capacity is becoming as important as securing wafer allocations.
• Evaluate alternative architectures. EMIB and other multi-die strategies can be viable trade-offs for faster supply and lower cost.
• Build OSAT relationships. Partnering with ASE (Riyueguang 日月光), SPIL (Xipin 矽品精密) and other OSATs can create contingency capacity.
• Design for flexibility. Modular chiplet-friendly designs can be re-targeted to multiple packaging flows if needed.

Bottom line

TSMC’s CoWoS tightness is a wake-up call that packaging is a first-order constraint for AI chips and GPUs.

Expect competition for slots, higher prices and a faster pivot toward alternatives like EMIB or OSAT-implemented flows.

Watch pricing, lead times and design trade-offs closely — because TSMC advanced packaging capacity will shape the AI chip market next year.

References

• 台积电先进封装产能紧张 英伟达抢占明年过半份额 – 财联社
• NVIDIA Pre-books Large Share of TSMC Advanced Packaging Capacity – DigiTimes
• CoWoS Packaging Technology – Taiwan Semiconductor Manufacturing Company (TSMC)