The semiconductor industry is on an unprecedented rise, with companies engaging in fierce competition in the realm of advanced packaging technologiesAmong the leaders in this arena is Taiwan Semiconductor Manufacturing Company (TSMC), particularly known for its CoWoS (Chip on Wafer on Substrate) technology, which is set to undergo significant production scale-up over the next few yearsAccording to a data report from SemiWiki, TSMC's monthly production capacity for CoWoS is expected to grow from 35,000 to 40,000 units in 2024, reaching between 65,000 and 75,000 units by 2025. This substantial increase is fueled by a projected doubling of capacity in just one year, underscoring the soaring demand for advanced semiconductor packaging solutions.

TSMC CEO C.CWei highlighted in last year’s earnings conference that the demand for advanced packaging has outstripped supply, a trend expected to endure into 2025, at which point the market may achieve a balance

This rise in capacity will primarily cater to key clients like Nvidia, which is projected to command a significant portion of TSMC's CoWoS output—approximately 63% of the total by 2025. Other major contributors to the demand include Broadcom, AMD, Marvell, and even tech giants like Amazon, all of which are continuously increasing their needs for TSMC's advanced packaging capabilities.

However, it is essential to note that despite these increases, the demand landscape will remain competitiveSemiWiki forecasts that Broadcom, AMD, and Marvell together will only make up around 10% of TSMC’s CoWoS capacity in 2025, with new entrants like Amazon and Intel's Habana accounting for a mere 3%. This indicates that the supply constraints for companies outside of Nvidia will still pose challenges, keeping many firms in a perpetual state of demand oversupply.

CoWoS technology serves as a crucial manufacturing seam for Nvidia’s high-performance GPUs such as the H100 and B100. Recent advancements show TSMC adopting various models of CoWoS, especially the CoWoS-S, -L, and -R variants, differentiated by their intermediary layers

Current processes utilize a photomask size 3.3 times larger and can encapsulate eight units of HBM3 (High Bandwidth Memory). By 2027, TSMC aims to transition to CoWoS-L, with a 8x photomask dimension and the capability to include up to twelve HBM4 units in packs, while also releasing a new 3D advanced packaging solution called SoIC (System on Integrated Chip).

The industry consensus suggests that traditional scaling methods dictated by Moore's Law are nearing their physical limitsConsequently, stakeholders see advanced packaging as a necessary evolution to enhance chip performanceBeyond TSMC, rival foundries like Samsung and Intel have developed their own innovative packaging solutionsSamsung introduced its advanced packaging variants— I-Cube, H-Cube, and X-Cube—where the first two offer 2.5D technology and the latter delivers 3D capabilitiesMeanwhile, Intel launched several solutions including EMIB and Foveros as their answers to the 2.5D and 3D packaging demands.

As the battle for supremacy in the semiconductor sector continues, advanced packaging has emerged as the new battleground

Currently, TSMC holds a commanding lead in terms of productionExperts from various semiconductor firms comment that TSMC's significant advantage lies in its manufacturing yield—a hard-won expertise accumulated through years of hands-on experience and rigorous process refinementsTSMC's ability to achieve exceptional yield rates is not merely circumstantial but rather a testament to their commitment toward continuous improvement and problem solving.

For those involved in advanced packaging Electron Design Automation (EDA), the competitive nature of the 2.5D packaging space hinges dramatically on yield ratesMinor variations in yield can result in enormous cost implications, especially since the high-value substrates involved demand precisionA professional in this field pointed out that any errors during the packaging process could destroy expensive components such as CPUs and GPUs

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Even if the chips remain intact, defects can compromise the costly substrates used in advanced packaging, consequently delaying time to market, and significantly elevating overall costs.

Despite TSMC's lead in yield rates, other manufacturers are not remaining idleThere's prominent innovation happening among competitors looking to challenge TSMC's footholdFor instance, TSMC's use of TSV (Through-Silicon Via) intermediary layers has been identified as expensive, prompting Intel to explore alternative avenuesIntel's EMIB technology, for instance, employs silicon bridges instead of TSVs to sidestep high manufacturing costs and complexities associated with TSV processesIntel is also integrating EMIB with Foveros to establish an innovative 3.5D solution.

The semiconductor landscape is thus marked by a modernization approach, with not just leading players like TSMC, Samsung, and Intel leading the charge—traditional packaging and testing firms such as ASE (Advanced Semiconductor Engineering) and Amkor are also eager to penetrate the advanced packaging domain