TSMC and advanced packaging surge fueled by NVIDIA

The convergence of artificial intelligence, high-bandwidth memory (HBM), and chiplet architectures has made packaging the new fulcrum of semiconductor performance. TSMC has emerged as the indispensable manufacturing cornerstone of this transition, while KLA Corp.—the industry’s metrology and inspection leader—has become its arbiter of quality. Together, they represent the two interlocking sides of an industry undergoing structural realignment: one builds the packages, the other assures their integrity.

For TSMC, NVIDIA’s next-generation GPU roadmap has created sustained pressure on its advanced-packaging capacity. CoWoS (Chip-on-Wafer-on-Substrate) output is running near full utilization, while the transition to CoPoS (Chip-on-Panel-on-Substrate) marks the next leap in scalability. For KLA, inspection and overlay precision at the packaging layer have become indispensable to ensuring yield at wafer, substrate, and panel levels.

KLA is included in this analysis because the acceleration of TSMC’s CoWoS and CoPoS programs directly increases demand for packaging inspection and metrology. Advanced packaging throughput is a function not only of physical capacity but of yield stability, and KLA provides the process-control infrastructure required to maintain that yield as die sizes increase and HBM stacks become denser. Its growth trajectory is therefore structurally tied to TSMC’s packaging expansion rather than adjacent to it.

TSMC’s advanced-packaging footprint is also entering a new expansion phase with two CoWoS facilities in Chiayi Science Park now nearing mass-production readiness, despite isolated workplace incidents that caused only partial work-area shutdowns. Local authorities expect approximately 3,000 new jobs as the second plant enters mass production next year and the first plant follows in the year after.

NVIDIA-driven demand surge
The industry’s single largest consumer of advanced packaging is NVIDIA. CoWoS wafer demand is forecast to climb from roughly 484 thousand in 2025 to nearly 678 thousand in 2026, a 40% rise year over year. 

This surge is tied directly to the ramp of Blackwell and Rubin GPUs. Total GPU output is expected to exceed 7.4 million units in 2026, with the Rubin CPX variant requiring CoWoS-L packaging to sustain inference workloads.

-- Dr. Robert Castellano, USA.