TSMC Reportedly Weighs Up to 20% CoWoS Packaging Price Increase

TSMC is reportedly weighing a price increase of as much as 20% for its Chip on Wafer on Substrate (CoWoS) advanced packaging, according to Trendforce, which cites supply chain sources and local media. The reported move reflects strained capacity amid AI demand and longer delivery times for chipmaking tools. TSMC has not confirmed the report.

Packaging Pressure Builds

CoWoS combines logic dies and high bandwidth memory stacks in one package, giving AI accelerators the data bandwidth demanding workloads require. Building these packages is becoming harder as designers add more compute and memory. Nvidia's Blackwell pairs two large GPU dies with eight HBM3E stacks, while the upcoming Rubin and Rubin Ultra are expected to push integration further.

Testing is also becoming a bottleneck. Blackwell reportedly takes three to four times longer to test than Nvidia's previous generation Hopper, and Rubin could need as much as seven times longer. Extended test cycles keep equipment occupied longer, making it harder to raise output as demand grows. GPUs are not the only products competing for capacity, as server CPUs and custom ASICs also need advanced packaging.

Equipment Lead Times and Orders

Tools are also taking longer to arrive. Equipment lead times have reportedly stretched from three to six months to as long as eight months. As a result, TSMC has reportedly placed this year's equipment orders at existing prices instead of negotiating discounts or extra features, a departure from its customary approach of using purchasing power to secure better terms.

The squeeze echoes a September report that TSMC's projected semiconductor equipment requirements had almost doubled in six months as the company expanded production to meet AI demand. Cliff Hou, deputy co-COO at TSMC, said that by July the company's expected equipment needs had reached 1.9 times its original estimate as AI demand accelerated. 'Compared with the pattern 30 years ago, we have never seen the demand increase that much, that frequency of changes,' Hou said at the time.

Supply Chain and Wafer Prices

TSMC is also trying to broaden its packaging supply chain. Earlier this month, GlobalFoundries agreed to produce silicon interposers for TSMC's CoWoS in the U.S. under a five year contract worth $2 billion, with production expected to ramp up in the first half of 2028. However, interposers are only one part of the packaging flow, so the agreement alone will not eliminate shortages.

Higher costs may not be limited to packaging. TSMC is reportedly considering broader price increases for 2027, with wafer prices on advanced process technologies expected to rise by 5% to 10%. Customers using 2nm and 3nm class nodes could face the steepest hikes, while those seeking capacity beyond original allocations may have to pay additional premiums, which could push some costs up by as much as 25%.

Capacity Outlook

Industry estimates cited by Trendforce put TSMC's monthly capacity at over 106,000 wafers in 2026, with a target of 227,000 wafers in 2027 as the company works to keep pace with demand for increasingly complex AI processors. If both the packaging and wafer price increases materialize, the cost of AI hardware will likely climb further, and some of that will inevitably be passed down the chain.

Sources: Tom's Hardware