TSMC's advanced packaging CoWoS capacity continues to have strong demand. Even after doubling its capacity in 2024 and collaborating with OSAT companies, it can still not fully meet customer demands.
TSMC actively cooperates with the leading Taiwanese IC packaging and testing company, ASE Holding. ASE is capable of executing a complete 2.5D CoWoS packaging and testing. With AI applications going strong, advanced packaging technology is undoubtedly the mainstream process for future AI chips. The hope is that this can bring about a new wave of growth momentum.
TSMC executives previously stated that due to the explosive increase in customer demand for CoWoS, the overflow of orders is being shared by packaging and testing subcontractors such as Amkor and ASE, which have initiated expansion projects for oS segments or some CoW segments. In the long run, the operational momentum of the related supply chains is expected to be considerable.
Looking back at the packaging and testing industry in 2023, even after a year of IC production control and inventory adjustments, the operations of various companies were still in a downturn due to sluggish demand. The IC packaging and testing industry's output value experienced a double-digit percentage decline for the entire year. However, after the slack season of the first quarter of 2024, operational momentum is expected to slowly rebound each quarter.
Looking ahead to 2024, the overall semiconductor inventory adjustment is nearing completion, and market visibility is slightly clearer. Despite that, most IC companies believe it cannot be called a full recovery yet, as the supply chain is still in the adjustment phase, and the cycle of slack/peak seasons has not returned to normal yet.
Fortunately, end-user product demand is gradually warming up, the true key to market recovery. In the long term, demand driven by automotive, HPC, and AIoT will support the semiconductor market's expected return to an upward trajectory.
The demand for advanced packaging holds strong and orders continue to come in and even increase. Coupled with the escalating geopolitical risks, global packaging and testing giants are also expanding their plants worldwide. Supply chain members indicated that Singapore, Malaysia, and Japan are expected to be the top choices for overseas expansion. Opportunities and limitations in these three locations will be actively monitored in the future.
Supply chain sources also analyze that most Taiwanese semiconductor manufacturers will consider five major factors when searching for overseas expansion sites, including government subsidies, sufficient talent supply, the health of upstream and downstream supply chains, the level of support from local customers, and most importantly, infrastructure completeness like stable power and water supply
TSMC CEO C.C. Wei also mentioned during an earnings call that Amkor has announced plans to build an advanced packaging and testing plant in the US, and the location will be close to TSMC's Arizona plant. TSMC is also cooperating with Amkor to meet the needs of local customers.
