TSMC Claims AI Packaging Shortage Likely Through 2024 Despite Expanding Capacity
Thanks to advances in packaging, putting more transistors on a chip isn’t the only way to boost its power. With demand for more complex semiconductors growing, particularly across artificial intelligence (AI) applications, packaging technology is becoming increasingly essential.
Thanks to the AI boom sparked by ChatGPT, chipmakers are struggling to keep up. TSMC, the world’s largest chipmaker, is experiencing a shortage in advanced chip packaging capacity as customers rush to place orders for powerful AI accelerators. But chairman Mark Liu recently noted that a shortage of chips isn’t the reason behind his firm’s inability to fulfill orders.
“It’s not the shortage of AI chips. It’s the shortage of our COWOS capacity,” he notes. “Currently we can’t fulfill 100% of our customers’ needs, but we try to support about 80%. We think this is a temporary phenomenon. After our expansion of [advanced chip packaging capacity], it should be alleviated in one and a half years.”
Temporary Shortage
If Liu’s words are any indication, the industry should brace for an AI packaging shortage until the end of 2024 at the earliest. COWOS is an essential technology for making today’s most powerful AI chips. It works by connecting a GPU to six high-bandwidth memory (HBM) chips to facilitate high-speed data transmission. When training large language models or running AI applications, this performance boost is sorely needed.
Some of today’s most popular AI chips, including Nvidia’s A100 and H100, are manufactured by TSMC using the COWOS process it pioneered. Companies from Google to Microsoft have been snapping up these chips faster than TSMC can produce them as the importance of AI grows. Nearly all tech firms today are exploring its potential applications—and profitability.
Like all products experiencing a sharp spike in growth, it will take time to satisfy the market’s demand for AI chips.
Expanding Capacity
Unsurprisingly, TSMC is working to increase its COWOS packaging capacity. The cornerstone of this effort is a new $2.9 billion advanced chip packaging facility it plans to build in Miaoli, Taiwan. TSMC is also reportedly in talks with government officials from Arizona to bring a packaging plant to the area alongside its two planned $40 billion fabs. At this time, it remains unclear when the Miaoli facility is expected to begin production.
However, given TSMC’s projection of shortages easing in late 2024, it isn’t unreasonable to assume the plant may be ready to operate around the same time.
Of course, the Taiwanese chip giant isn’t the only one pursuing chip packaging. Intel is investing heavily in the technology and aims to quadruple its advanced chip packaging capacity by 2025. Samsung has also emerged as an important player in this space as it seeks to compete for global chip supremacy.
As for TSMC’s future, Liu views packaging as a central component not just for his company but for all chipmakers. At the SEMICON Taiwan industry fair last month, he said, “We are now putting together many chips into a tightly integrated massive interconnect system. This is a paradigm shift in semiconductor technology integration.”
Within the next decade, TSMC predicts chips will contain upwards of one trillion transistors. For perspective, today’s most advanced semiconductors have about 100 billion. To achieve this increase, chipmakers will need to harness the power of advanced packaging techniques that provide 3D integration. Securing the capacity to make these chips is the first step.
