Taiwan Semiconductor Manufacturing Company (TSMC) has made headlines with its record-breaking $100 billion investment in the United States, marking the largest foreign direct investment in US history. This move is driven by the growing demand for advanced packaging technology, crucial for artificial intelligence (AI) applications. According to Nvidia CEO Jensen Huang, “the importance of advanced packaging for AI is very high,” and he claims, “no one has pushed advanced packaging harder than me.”
Advanced packaging refers to techniques that enable the placement of multiple chips, such as graphic processing units (GPU), central processing units (CPU), or high bandwidth memory (HBM), closer together. This leads to improved performance, faster data transmission, and reduced energy consumption. Think of these chips as different departments within a company; the closer they are, the more efficient the operation becomes. Dan Nystedt, vice president of TrioOrient, explains, “You’re trying to put the chips as close together as possible, and you’re also putting in different solutions to make the connection between the chips very easy.”
Advanced packaging is vital for AI applications, ensuring they run without delays or glitches. TSMC’s CoWoS (Chips-on-Wafer-on-Substrate) technology is particularly significant, as it’s used in producing AI processors like Nvidia and AMD’s GPUs. Nystedt notes, “You could call it the Nvidia packaging process if you want to. Almost anyone making AI chips is using the CoWoS process.” With demand for CoWoS skyrocketing, TSMC is ramping up production capacity. Huang mentioned that the current advanced packaging capacity is “probably four times” what it was less than two years ago, emphasizing the technology’s importance for future computing.
Having advanced packaging facilities in Arizona will provide the US with a “one-stop shop” for chip production, strengthening its AI arsenal. Eric Chen, an analyst with Digitimes Research, says, “It ensures that the US has a complete supply chain from advanced manufacturing to advanced packaging, which would benefit the US’ competitiveness in AI chips.” This move also reduces potential supply chain risks by not having all production in one location. Nystedt adds, “Instead of having all eggs in one basket, CoWoS would be in Taiwan and also the US, and that makes you feel more safe and secure.”
CoWoS was invented by a team of engineers led by Chiang Shang-yi, who served two stints at TSMC. Despite initial struggles to find customers, the AI boom turned CoWoS into a highly sought-after technology. Chiang recalled, “I only had one customer… I really became a joke (in the company), and there was so much pressure on me.” However, he noted, “The result was beyond our original expectation.”
The global semiconductor supply chain involves key players like TSMC, Samsung, Intel, and OSAT firms such as JCET Group, Amkor, and ASE Group. With TSMC’s investment, the US is poised to strengthen its position in AI chip production, benefiting major clients like Apple, Nvidia, AMD, Qualcomm, and Broadcom.