Nvidia’s Demand for Advanced Chip Packaging Remains Strong

Robust Needs Amid Changes in Technology

Demand for advanced packaging from Taiwan Semiconductor Manufacturing Co TSM is strong, according to Nvidia Corp’s NVDA chief Jensen Huang. He made these comments in light of Nvidia’s plans to cut orders as it adapts to evolving technology needs.

To support its transition to the Blackwell AI chip, Huang plans to use Chip-On-Wafer-On-Substrate-L (CoWoS-L) technology. He indicated that the company would gradually increase its capacity related to this new approach, while it currently relies on CoWoS-S packaging for its Hopper AI chips.

Historically, Nvidia has primarily used CoWoS-S for integrating its AI chips, which has positioned them centrally in their production process.

Nvidia’s latest Blackwell AI chip will utilize Taiwan Semiconductor’s advanced CoWoS packaging technology, which is essential for their product development.

In Related News: Taiwan Semiconductor Q4 Earnings: 3nm and 5nm Nodes Drive Topline Growth, Expanding Margins, and Strong Q1 Outlook

Analyst Ming-Chi Kuo from TF International Securities and some Taiwanese media sources have noted Nvidia’s shift toward CoWoS-L, which could impact Taiwan Semiconductor’s revenue from CoWoS-S.

Despite packaging constraints causing delays in Blackwell chip production, Nvidia has opted for Fan-Out Panel Level Packaging (FOPLP) technology for its GB200 AI server chips to alleviate this bottleneck.

Huang indicated that advanced packaging capacity has improved significantly, currently “probably four times” what was available two years ago.

Earlier reports suggest that Taiwan Semiconductor might double its CoWoS production capacity by 2025, with Nvidia projected to consume over 50% of that capacity.

Even with these production boosts, demand for advanced packaging continues to surpass supply, prompting Taiwan Semiconductor’s plans to double its capacity by 2025.

Stock Movements: As of the latest update on Thursday, NVDA shares decreased by 1.52%, reaching $134.18, while TSM shares rose by 4.99%.

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