TSMC Shares Rise Nearly 3% Pre-Market as It Expands Outsourced Packaging to Meet Nvidia AI Chip Demand Amid Capacity Constraints

TradingKey - As demand for AI chips continues to surge, CoWoS advanced packaging capacity has once again become the focus of the market. According to market sources, driven by continuous order growth from AI chip customers such as Nvidia ( NVDA ), AMD ( AMD) and other AI chip customers, TSMC's ( TSM) existing CoWoS advanced packaging capacity is running near full load. The company is further expanding its outsourced capacity to meet future supply demand for AI accelerators.

TSMC pre-market stock price chart, Source: FUTUBULL

Boosted by the news, TSMC's US-listed shares rose in pre-market trading. The market believes that the continuous growth in AI chip demand is not only driving the expansion of the wafer foundry business but is also becoming a new growth engine for the advanced packaging segment. Investors are focused on whether TSMC can ease CoWoS capacity bottlenecks and further enhance AI chip supply capabilities by expanding internal capacity and introducing external partners.

CoWoS is currently one of the key advanced packaging technologies in the AI chip manufacturing process, which can efficiently integrate multiple chips such as GPUs and High Bandwidth Memory (HBM) to enhance AI computing performance. As demand for high-performance packaging from Nvidia's Blackwell series and the future Rubin platform continues to rise, CoWoS has become one of the critical bottlenecks limiting AI chip shipments.

According to market sources, TSMC is expanding its cooperation with packaging and testing companies such as ASE Technology Holding and SPIL, aiming to increase the overall supply scale by expanding outsourced packaging capacity. Meanwhile, the company continues to expand its own CoWoS production lines, and its advanced packaging capacity is expected to maintain rapid growth over the next few years.

For TSMC, although the tight CoWoS capacity brings short-term supply pressure, it also represents growth opportunities in higher value-added businesses. Compared with traditional wafer foundry services, advanced packaging offers higher profit margins. As demand for AI chips continues to expand, CoWoS is expected to become an important driver of TSMC's future revenue growth.