A US delegation has visited Taiwan in order to discuss semiconductor industry partnerships—Katie Hobbs, governor of Arizona, declared that plans for TSMC's Fab 21 facility could be expanded into fairly ambitious areas: "Part of our efforts at building the semiconductor ecosystem is focusing on advanced packaging, so we have several things in the works around that right now." Bloomberg and Reuters report that she attended an important US-Taiwan supply chain forum in Taipei. Mass production at the Phoenix-area foundry has been delayed into 2025, so it is somewhat surprising to hear about greater aspirations for the site. We recently discovered that TSMC will be investing an additional $4.5 billion into its North American subsidiary, but it is too early to say whether this will finance any major upgrades.

TSMC produced a brief statement regarding the latest negotiations: "We believe the dialogues that we held during this visit will help us to work together even more closely in the future." The firm believes that the expansion of advanced chip packaging capacity will alleviate supply constraints—in the context of Taiwanese operations, at least for the moment. The Bloomberg report also focused on another delegate—Laurie E. Locascio, Under Secretary of Commerce—she announced that the North American government is starting to discuss research and development initiatives with TSMC. The key goal being to bring some of that market leading technology and knowledge stateside.

TrendForce reports that explosive growth in generative AI applications like chatbots has spurred significant expansion in AI server development in 2023. Major CSPs including Microsoft, Google, AWS, as well as Chinese enterprises like Baidu and ByteDance, have invested heavily in high-end AI servers to continuously train and optimize their AI models. This reliance on high-end AI servers necessitates the use of high-end AI chips, which in turn will not only drive up demand for HBM during 2023~2024, but is also expected to boost growth in advanced packaging capacity by 30~40% in 2024.

TrendForce highlights that to augment the computational efficiency of AI servers and enhance memory transmission bandwidth, leading AI chip makers such as Nvidia, AMD, and Intel have opted to incorporate HBM. Presently, Nvidia's A100 and H100 chips each boast up to 80 GB of HBM2e and HBM3. In its latest integrated CPU and GPU, the Grace Hopper Superchip, Nvidia expanded a single chip's HBM capacity by 20%, hitting a mark of 96 GB. AMD's MI300 also uses HBM3, with the MI300A capacity remaining at 128 GB like its predecessor, while the more advanced MI300X has ramped up to 192 GB, marking a 50% increase. Google is expected to broaden its partnership with Broadcom in late 2023 to produce the AISC AI accelerator chip TPU, which will also incorporate HBM memory, in order to extend AI infrastructure.

TSMC is quickly reacting to a surge in demand for NVIDIA hardware following an AI industry boom - the Taiwanese semiconductor contract manufacturer is reportedly planning to further expand its advanced packaging capabilities, due to current production lines hitting maximum capacity. News outlets have also cited the growth of 5G technology and Internet of Things (IoT) device markets as contributing factors. DigiTimes Asia reports that clients are snapping up chip-on-wafer-on-substrate (CoWoS) at an increased and unprecedented rate. TSMC has decided to provide NVIDIA - an extremely high profile customer - with an extra 10,000 CoWoS wafers. The article sourced information from a recent company shareholder meeting, where chairman Mark Liu discussed these expansions plans. He outlined improved factory facilities that will result in an additional output of 1,000 to 2,000 wafers per month. TSMC is set to upgrade equipment at its existing facilities in order to meet increasing demand.

Trendforce has also published its evaluation from the same TSMC shareholding meeting: "Due to the generative AI trend initiated by ChatGPT, the demand for advanced packaging orders for TSMC has increased, forcing an increase in advanced packaging capacity. TSMC also pointed out that the demand for TSMC's advanced packaging capacity far exceeds the existing capacity, and it is forced to increase production as quickly as possible. Chairman Mark Liu stated that the current investment in R&D focuses on two legs, namely 3D IC (chip stacking) and advanced packaging...At present, three-quarters of TSMC's R&D expenditure is used for advanced processes, and one quarter for mature and special processes, with advanced packaging falling under mature and special processes."