The world's leading chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), is grappling with the challenge of meeting the soaring demand for high-performance computing (HPC) GPUs designed for AI training. The company's chairman, Mark Liu, revealed on Friday that TSMC's current production capacity is unable to satisfy the market's growing need for advanced packaging capability.
Speaking to Nikkei, Liu confirmed that the shortage of AI accelerators is not due to a lack of AI chips designed by Nvidia (NASDAQ:NVDA), one of the most sought-after GPU manufacturers. Instead, it hinges on TSMC's own limited capacity with Chip-on-wafer-on-substrate (CoWoS) packaging. This advanced packaging platform provides "best-in-breed performance and highest integration density" for HPC hardware applications, according to TSMC.
Despite the Taiwanese company's efforts to fulfill customer needs, it can currently only meet approximately 80% of manufacturing requests. This shortfall comes as AI servers are projected to surge to an estimated market value of $150 billion by 2027, indicating a significant increase in demand for GPU-based boards, which TSMC manufactures.
TSMC produces the majority of GPUs, FPGAs, and other specialized chips designed to accelerate AI computations. These accelerators utilize High Bandwidth (NASDAQ:BAND) Memory (HBM) to provide maximum bandwidth for AI training and are manufactured using the CoWoS packaging technique. Other chipmaking companies offer similar packaging capacities, but TSMC likely receives the largest orders from reputable chip firms like Nvidia and AMD.
Industry analysts note that advanced packaging technologies like CoWoS are expensive and pose financial risks, discouraging smaller manufacturers from investing heavily in enhancing their packaging capabilities.
In response to this challenge, TSMC is investing nearly $3 billion in a new packaging fab set to be operational by 2027. Liu assured investors that the company is committed to expanding its packaging capacity "as quickly as possible." He anticipates that the manufacturing output "tightness" will ease by the end of next year, with CoWoS wafer production expected to double in 2024 compared to 2023.
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