TSMC CoWoS Supply-Demand Gap Expected to Narrow from 20% to 10%
N.R. Finch
TSMC's CoWoS advanced-packaging supply gap is expected to shrink from 20% to roughly 10% by end-2026 — the tightest bottleneck in AI chip production is loosening, while next-gen platform CoPoS is already on the development fast track.
A gap shrinking from 20% to 10% — why does it matter?
CoWoS — a packaging process that bonds AI chips to high-bandwidth memory on one substrate — is the mandatory final step for every high-end AI accelerator shipping today.
Institutional investors now expect the supply-demand gap to fall from about 20% to roughly 10% by end-2026, with further improvement likely in 2027.
This means → the past year's constraint — "chips designed, but no packaging slot available" — is easing. AI compute hardware scale-up will increasingly hinge on demand, not supply.
How much capacity is actually being added?
TrendForce data shows TSMC's monthly CoWoS output could reach 120,000–140,000 wafer equivalents in 2026, a record high.
Adding 50,000–60,000 monthly units from outsourced assembly partners, total industry capacity approaches 200,000 per month.
At its May 2025 technology symposium, TSMC projected CoWoS capacity would grow at a compound annual rate exceeding 80% from 2022 to 2027.
In plain terms = capacity will have multiplied roughly tenfold in five years — an extraordinary ramp for a single packaging process in semiconductors.
Will supply and demand truly balance by 2027?
TrendForce expects the severe global shortage in 2.5D packaging — the broader category CoWoS belongs to — to begin easing in 2027.
Two factors support the outlook: order-spillover effects (large customers unable to secure TSMC slots are turning to rival foundries) and TSMC's plan to expand CoWoS capacity by more than 60% in 2027.
This reflects a critical verification point — markets will measure actual delivery data against today's projections to judge whether this expansion wave delivers on its promises.
Next-gen packaging CoPoS — who goes first, and when?
As individual AI chips grow larger, current CoWoS technology is approaching physical limits. TSMC is therefore developing its next-gen platform, CoPoS.
TSMC established a CoPoS R&D line in 2025 at subsidiary VisEra. Material and equipment qualification could finish as early as June 2026, with pilot production targeted for mid-2027.
According to TrendForce, Nvidia's Feynman platform is expected to be CoPoS's first commercial customer, entering full-scale production in 2028–2029 at TSMC's Chiayi fab and its Arizona facility in the U.S.
What does this mean for the market?
Near-term, a narrowing supply gap eases concerns about AI infrastructure supply shortfalls — packaging is no longer the tightest link in the chain.
Longer-term, CoPoS gives TSMC a deeper technological moat in advanced packaging — rivals must catch up not just on current capacity but on the next-generation process.
This means → TSMC's pricing power and customer lock-in across the AI hardware supply chain show no sign of weakening in the foreseeable future.
Content is for reference only, not financial advice.