Key Findings
The primary bottleneck in AI chip production has decisively shifted from advanced process technology to advanced packaging capacity, triggering an intense global capital expenditure race. Crucially, the limited supply of TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) technology is compelling major AI chip developers, including Nvidia, to explore diversifying their supply chains, potentially incorporating competing solutions like Intel’s EMIB process.
Technical and Clinical Details
The semiconductor industry is witnessing rapid expansion in High Bandwidth Memory (HBM) wafer production, stacking, packaging, and testing capabilities, with South Korean memory chipmakers significantly ramping up investments. Taiwan’s ASE anticipates its advanced packaging revenue to surpass $3.5 billion this year, reflecting a 10% growth, underscoring the escalating demand. Concurrently, Amkor is planning a monumental investment of up to $7 billion for a new facility in Arizona, with initial production targeted for early 2028. Japan’s Ibiden forecasts substantial growth in IC substrates for AI servers by 2030, while Ajinomoto maintains over 95% market share in the global ABF (Ajinomoto Build-up Film) substrate market. SK Hynix has further enhanced HBM4E thermal resistance through its proprietary MR-MUF process, demonstrating ongoing innovation in performance. China’s leading OSAT provider, JCET, is investing approximately $1.15 billion in a new advanced packaging and testing facility in Shanghai, reflecting the global nature of this expansion.
Background and Industry Context
The exponential performance gains in AI chips are no longer solely dependent on transistor scaling but increasingly on advanced packaging techniques that efficiently integrate multiple chiplets and HBM. Technologies such as CoWoS are vital for achieving higher data transfer rates and lower power consumption, yet their manufacturing demands sophisticated processes and substantial capital, leading to current supply shortfalls. The scarcity of key packaging materials like ABF substrates and overall manufacturing capacity is pressing, driving semiconductor manufacturers to bolster in-house capabilities and forge partnerships with OSATs to alleviate these bottlenecks. This situation elevates advanced packaging from a ‘back-end’ process to a strategic, front-and-center component of the semiconductor value chain.
Strategic Significance and Outlook
The sustained surge in AI chip demand guarantees continued acceleration of investments in advanced packaging. Nvidia’s consideration of Intel’s technology signals not only heightened competition but also potential cross-industry technical collaborations to overcome critical supply limitations. With ABF substrate and CoWoS capacity shortages projected to persist through 2028, innovation and expansion in advanced packaging are paramount for the development of next-generation AI infrastructure. A concerted effort involving material suppliers, equipment manufacturers, OSATs, and foundries is essential to resolve these systemic bottlenecks and enable the full potential of AI.
Source: https://economy.ac/news/2026/07/202607289543
Get our weekly technology intelligence — free
Receive an infographic that lets you judge at a glance whether each field’s analysis report is worth reading.
Subscribe Free — Weekly Tech Intelligence
By subscribing, you’ll receive Troy-Technical’s weekly technology intelligence newsletter.
- Your email and selected fields are used only to deliver the newsletter.
- We never share your information with third parties.
- You can unsubscribe anytime via the link in each email.
See our Privacy Policy for details.
Takes about a minute · Unsubscribe anytime
Comments