The demand for AI computing power is skyrocketing, with advanced packaging capacity becoming key. As per a report from Commercial Times citing industry sources, it has pointed out that TSMC is focusing on the growth potential of advanced packaging.

Southern Taiwan Science Park, Central Taiwan Science Park and Chiayi Science Park are all undergoing expansion. The Chiayi Science Park, approved this year, is set to construct two advanced packaging factories ahead of schedule. Phase one of Chiayi Science Park is scheduled to break ground this quarter, with first tool-in slated for the second half of next year. Phase two of Chiayi Science Park is expected to start construction in the second quarter of next year, with first tool-in planned for the first quarter of 2027, continuing to expand its share in the AI and HPC markets.

Advanced packaging technology achieves performance enhancement by stacking, thus increasing the density of inputs/outputs. TSMC recently unveiled numerous next-generation advanced packaging solutions, involving various new technologies and processes, including CoWoS-R and SoW.

The development of advanced packaging technology holds significant importance for the advancement of the chip industry. TSMC’s innovative solutions bring revolutionary wafer-level performance advantages, meeting the future AI demands of ultra-large-scale data centers.

Industry sources cited by the same report has stated that TSMC’s introduction of system-level wafer technology enables 12-inch wafers to accommodate a large number of chips, providing greater computational power while significantly reducing the space required in data centers.

This advancement also increases the power efficiency. Among these, the first commercially available SoW product utilizes an integrated fan-out (InFO) technology primarily for logic chips. Meanwhile, the stacked chip version employing CoWoS technology is expected to be ready by 2027.

As stacking technology advances, the size of AI chips continues to grow, with a single wafer potentially yielding fewer than ten super chips. Packaging capacity becomes crucial in this scenario. The industry sources cited in Commercial Time’s report also note that TSMC’s Longtan Advanced Packaging plant with a monthly capacity of 20,000 wafers is already at full capacity. The Zhunan AP6 plant is currently the main focus of expansion efforts, with equipment installation expected to ramp up in the fourth quarter at the  Central Taiwan Science Park facility, accelerating capacity preparation.

TSMC’s SoIC has emerged as a leading solution for 3D chip stacking. AMD is the inaugural customer for SoIC, with its MI300 utilizing SoIC paired with CoWoS.

Apple has also officially entered the generative AI battlefield. It’s noted by the sources as per the same report that Apple’s first 3D packaged SoIC product will be its ARM-based CPU for AI servers, codenamed M4 Plus or M4 Ultra, expected to debut as early as the second half of next year. The 3D packaged SoIC technology is projected to be further extended to consumer-grade MacBook M series processors by 2026.

NVIDIA, on the other hand, is reportedly set to launch the R100 in the second half of next year, utilizing chiplet and the CoWoS-L packaging architecture. It’s not until 2026 that they will officially introduce the X100 (tentative name), which adopts a 3D packaging solution incorporating SoIC and CoWoS-L.

As per a recent report from MoneyDJ citing industry sources, the SoIC technology is still in its early stages, with monthly production capacity expected to reach around 2,000 wafers by the end of this year. There are prospects for this capacity to double this year and potentially exceed 10,000 wafers by 2027.

With support from major players like AMD, Apple, and NVIDIA, TSMC’s expansion in SoIC is viewed as confident, securing future orders for high-end chip manufacturing and advanced packaging.

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• [News] TSMC Reportedly Secures 4 Major Clients for SoIC, Including Apple, NVIDIA and Broadcom
• [News] TSMC Reportedly Sensing Increased Orders Again, CoWoS Production Capacity Surges

(Photo credit: TSMC)

In a bid to catch up with leading players like TSMC, the South Korean government is said to have approved a national-level initiative aimed at actively promoting the development of advanced chip packaging technologies, according to a report from South Korean media outlet TheElec.

Citing anonymous sources, the report on April 30th indicates that the feasibility of the aforementioned plan has passed the preliminary examination conducted by the Korea Institute of S&T Evaluation and Planning (KISTEP).

According to reports, the preliminary review targeted a national-level project with a value exceeding KRW 50 billion, with direct government sponsorship exceeding KRW 30 billion. Such projects rarely pass the review in one go, but the aforementioned chip packaging case is an exception.

Most of the reviewers at KISTEP have reportedly reached a consensus, recognizing the necessity of the project to catch up with leaders in advanced packaging like Taiwan’s TSMC, making South Korea a frontrunner.

As per TrendForce’s previous report, by 2027, Korea’s share in advanced process capacity is originally expected to reach 11.5%, with room for further growth.

However, the budget for the 7-year project has been reduced from the original KRW 500 billion to KRW 206.8 billion. After passing the preliminary feasibility review, the project is expected to be formally announced later this year (2024) and is scheduled to commence implementation next year.

Cited by the same report from TheElec, a source involved in the project stated that the budget cut was entirely expected, but the project’s single-pass approval is indeed noteworthy, indicating the government’s deep understanding of the importance of chip packaging.

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(Photo credit: TSMC)

According to a report from Economic Daily News, Luxshare, a crucial player in the Chinese Apple supply chain, is said to be entering NVIDIA’s supply chain for the GB200, as it has announced the development of various components tailored for NVIDIA’s GB200 AI servers.

These components encompass connector, power-related items, and cooling products. The sources cited by the same report have noted that Luxshare’s focus areas align closely with Taiwanese expertise, setting the stage for another direct showdown with Taiwanese manufacturers.

Luxshare, previously not prominent in the server domain, has now reportedly made its move into NVIDIA’s top-tier AI products, attracting market attention. Especially given Luxshare’s swift entry into the iPhone supply chain previously, aggressively competing for orders with Taiwanese Apple suppliers.

As per the same report, Luxshare has revealed in its investor conference records that it has developed solutions corresponding to the NVIDIA GB200 AI server architecture, including products for electrical connection, optical connection, power management, and cooling. The company is reportedly said to be expected to offer solutions priced at approximately CNY 2.09 million and anticipates that the total market size will reach hundreds of billions of CNY.

If Luxshare adopts a similar strategy of leveraging its latecomer advantage in entering the NVIDIA AI supply chain, it will undoubtedly encounter intense competition.

Industry sources cited by the report also point out that Luxshare’s claim to supply components for NVIDIA’s GB200 is in areas where Taiwanese suppliers excel.

For instance, while connector is Luxshare’s core business, Taiwanese firms like JPC Connectivity and Lintes Tech also serve as suppliers of connectors for NVIDIA’s GB200 AI servers. They are poised to compete directly with Luxshare in the future.

In terms of power supply, Delta Electronics leverages its expertise in integrating power, cooling, and passive components to provide a comprehensive range of AI power integration solutions, from the grid to the chip. They cater to orders for power supplies for NVIDIA’s Blackwell architecture series B100, B200, and GB200 servers, and will also compete with Luxshare in the future.

When it comes to thermal management, Asia Vital Components and Auras Technology are currently the anticipated players in the market, and they are also poised to compete with Luxshare.

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• [News] NVIDIA’s H100 Chip Heat Declines, CoWoS Capacity Eases
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(Photo credit: Luxshare)

The recent rapid downturn in the black market prices of AI servers equipped with NVIDIA’s highest-tier AI chip, the H100, in China, has attracted attention, as per a report from Economic Daily News. This fluctuation, triggered by US sanctions, has reportedly prompted concerns about its impact on overall supply and demand dynamics, and whether it will further squeeze normal market mechanisms.

Industry sources cited by the same report have revealed that the prices of AI servers equipped with the H100 chip have recently plummeted on the Chinese black market. This is primarily due to the imminent launch of NVIDIA’s next-generation high-end AI chip, the H200. With the transition between old and new products, scalpers who previously hoarded H100 chips to drive up prices are now offloading their large inventories.

As per a report from Reuters, despite the US expanding its ban on AI technology-related exports to China last year, some dealers are still taking risks. There is still trading of H100 chips in the Huaqiangbei electronics market in northern Shenzhen, but it has all gone underground. The chips are said to be mainly imported into China through purchasing agents or shell companies set up overseas, making them accessible to Chinese universities, research institutions, and even companies through special dealer channels.

Due to the US ban, both the H100 chip and AI servers equipped with it can only be traded on the black market, not openly. Scalpers have significantly inflated prices, with servers featuring the H100 chip reaching over CNY 3 million (over USD 420,000) in China, compared to the official price of USD 280,000 to USD 300,000, resulting in profits of over 10% for some middlemen after deducting logistics and tariffs.

With the H200 set to launch in the second quarter, the H100 will become the “previous generation” product. Consequently, middlemen who had hoarded H100 chips are eager to sell their inventory, leading to a rapid correction in prices.

Recently, servers with the H100 chip on the China black market have dropped to around CNY 2.7 to 2.8 million, with spot prices in Hong Kong falling to around CNY 2.6 million, representing a decline of over 10%.

According to a previous report from Reuters, in response to Chinese universities and research institutions reportedly acquired high-end AI chips from NVIDIA through distributors, a NVIDIA spokesperson stated that the report does not imply that NVIDIA or any of its partners violated export control regulations, and the proportion of these products in global sales is negligible. Nvidia complies with U.S. regulatory standards.

Read more

• [News] NVIDIA’s H100 Chip Heat Declines, CoWoS Capacity Eases
• [News] NVIDIA’s H100 AI Chip No Longer Out of Reach, Inventory Pressure Reportedly Forces Customers to Resell

(Photo credit: NVIDIA)

NVIDIA’s upcoming next-generation high-end AI chip, the H200, is on the horizon. As per a report from Economic Daily News, currently, the mainstream high-end H100 chip has seen a decline in demand, putting an end to the previous state of supply shortages.

As per the same report, Taiwanese contract manufacturers openly acknowledge that the supply of H100 chips is indeed smoother now, primarily due to the alleviation of tight CoWoS advanced packaging capacity constraints.

Despite a significant short-term correction in the market price of H100 chips in China, Taiwan’s AI server manufacturers, such as Quanta and Inventec, are still striving to maximize shipments. This quarter, the momentum of AI server shipments is expected to see a significant boost.

From the perspective of server manufacturers, the demand and pricing of critical components are typically negotiated directly between cloud service providers (CSPs) and chip manufacturers like NVIDIA. Once the price and quantity are agreed upon, manufacturers are then commissioned to produce and ship the products.

Quanta emphasized that with the easing of tight capacity in upstream CoWoS advanced packaging, the supply of H100 chips has become smoother. Maintaining their previous stance, they anticipate that the momentum of AI server shipments will begin to show from this quarter onwards.

A previous report from tom’s hardware once emphasized that the ease of purchasing H100 GPUs has brought about some changes in the market as well. Customers now prioritize price and practicality when leasing AI computing services from cloud service providers.

Additionally, alternatives to the H100 GPU have emerged in the current market, offering comparable performance and software support. These may come at more affordable prices, potentially fostering a fairer market environment.

Mike Yang, Senior Vice President and General Manager of Quanta Cloud Technology (QCT), also mentioned recently that they expect to see a significant improvement in chip supply by June, which will subsequently boost server shipment performance in the second half of the year.

Read more

• [News] NVIDIA’s H100 AI Chip No Longer Out of Reach, Inventory Pressure Reportedly Forces Customers to Resell
• [News] CoWoS Capacity Shortage Challenges AI Chip Demand, while Taiwanese Manufacturers Expand to Seize Opportunities

(Photo credit: NVIDIA)