TSMC Achieves Over 98% CoWoS Yield; ABF Substrates Emerge as Next Bottleneck for AI Chip Expansion

August 17, 2026

Xenospectrum Taiwan

Overview

TSMC has announced that its advanced CoWoS packaging technology, particularly for 5.5x reticle AI chip products, consistently achieves yields exceeding 98%. While CoWoS capacity has doubled annually for three consecutive years, nearly meeting demand, the primary supply chain bottleneck is shifting from HBM memory to ABF substrates. The company’s SoIC technology, with 6-micron hybrid bonding pitches already in mass production, targets a further reduction to 4.5 microns by 2029. This shift highlights a critical material constraint for future AI chip expansion, prompting suppliers like Ajinomoto to plan significant ABF capacity increases through 2030 and beyond.

In Depth

Key Findings

TSMC has publicly confirmed that its advanced CoWoS packaging technology, specifically for 5.5x reticle-sized AI-related products, has achieved stable yields of over 98%. This high yield is critical as CoWoS capacity has doubled annually for the past three years, bringing it “very close” to meeting current demand. However, a new critical bottleneck is emerging within the semiconductor supply chain: ABF (Ajinomoto Build-up Film) substrates, which are now identified as the next major constraint for the expansion of AI chip production, surpassing previous concerns regarding High Bandwidth Memory (HBM) supply.

Technical / Clinical Details

According to Jun He, TSMC’s Vice President of Advanced Packaging Technology and Services, the company’s CoWoS technology demonstrates exceptional production efficiency for high-performance AI chips. Furthermore, TSMC’s SoIC (System-on-Integrated-Chips) technology is entering a high-growth phase, with 6-micron hybrid bonding pitches already in mass production. Plans are underway to shrink this pitch to 4.5 microns by 2029, enabling even denser 3D stacking. The CoWoS roadmap includes scaling to 14x reticle sizes by 2029, facilitating the integration of larger and more complex AI accelerators.

Background & Context

The burgeoning demand for artificial intelligence has dramatically increased the requirements for advanced chip packaging. Technologies like CoWoS and SoIC, which enable 2.5D and 3D integration of various dies (logic, memory), are essential for achieving higher data transfer rates and lower power consumption. While HBM supply has been a previous point of concern, industry efforts have largely addressed this, leading to improved availability. The focus has now shifted to ABF substrates, a crucial insulating material for high-performance IC package substrates. The increasing complexity and size of AI processors necessitate larger and more advanced ABF substrates, making their constrained supply a significant impediment to the industry’s growth.

Strategic Significance & Outlook

To mitigate the ABF substrate shortage, Ajinomoto, a leading global supplier, is planning to progressively expand its production capacity at facilities including its Gunma plant through 2030. Additionally, the company is considering a third factory to meet demand beyond 2030, aiming for long-term supply stability. TSMC’s advancements in SoIC and CoWoS expansion plans are foundational for future AI and High-Performance Computing (HPC) chip performance. However, the overall balance of the supply chain, particularly the stable supply of critical materials like ABF, will be a decisive factor in the continued growth and innovation within the semiconductor industry.

Source: https://xenospectrum.com/en/tsmc-cowos-memory-abf-bottlenecks/

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