TSMC plans to double AI chip packaging capacity by 2028

Taiwan Semiconductor Manufacturing Company ↗ 1.22% is preparing to double its advanced chip packaging capacity by the end of 2028, according to Taiwanese media reports, as demand for AI processors continues to outstrip supply and push overflow orders to rival firms.

TSMC's chip-on-wafer-on-substrate, or CoWoS, capacity is expected to reach roughly 260,000 twelve-inch wafer equivalents per month by the end of 2028, up from an estimated 130,000 by the end of this year. The expansion will focus on production facilities at TSMC's Arizona campus in the United States and the AP7 facility in Taiwan.wccftech+1

The Packaging Bottleneck

CoWoS has become the dominant packaging technology for high-performance AI accelerators, used by Nvidia ↘ 0.03%, AMD Advanced Micro Devices, Inc. ↗ 2.49%, and an expanding list of cloud providers designing custom chips. The technology uses a silicon interposer with through-silicon vias to connect logic and memory dies on a single package, enabling the high bandwidth and low latency that large AI models require.3dfabric.tsmc+1

Despite years of capacity buildout — from roughly 13,000 wafers per month at the end of 2023 to the current trajectory — demand has consistently run ahead of supply. TrendForce estimated the CoWoS supply-demand gap was near 20 percent in mid-2026, narrowing to about 10 percent by year-end. The persistent shortage has sent customers to alternative packagers including UMC United Microelectronics Corporation ↗ 2.35%, Amkor ↗ 4.44%, and ASE ↘ 0.98%.wccftech+2

Intel's EMIB-T as an Alternative

Intel ↗ 2.61% is positioning its EMIB-T technology as a credible alternative. Unlike CoWoS, EMIB-T embeds silicon bridge connections inside an organic substrate rather than relying on a full silicon interposer. Analysts quoted in the report estimate Intel's EMIB-T capacity, converted to a CoWoS-equivalent measure, could reach 15,000 to 20,000 wafers per month in 2027 and 40,000 to 45,000 by 2028. Intel has reported yields of 90 percent on EMIB, and companies including MediaTek are reportedly evaluating the technology for production as early as late 2027.wccftech+2

EMIB-T's architecture is seen as particularly suited to custom AI chips designed by cloud giants such as Google Alphabet Inc. ↗ 1.53% and Amazon Amazon.com, Inc. ↗ 1.94%, rather than the high-power GPUs that remain CoWoS's core market.wccftech

Broader Implications

The planned doubling underscores how advanced packaging — once a back-end afterthought — has become the central constraint in AI chip production. TSMC's chips fabricated at its Arizona plant currently must be flown to Taiwan for CoWoS packaging, a logistical bottleneck the new Arizona packaging lines are meant to address. With AI workloads showing no sign of plateauing, the race to expand packaging capacity is shaping up as one of the semiconductor industry's defining challenges through the end of the decade.wccftech