TSMC weighs raising CoWoS packaging prices by up to 20% amid capacity crunch
Key Facts
TSMC is considering a new round of price increases for its advanced CoWoS packaging service that could reach 20%, according to a report published by Taiwan’s Commercial Times on October 27 and carried by IEK. The report said chipmakers and packaging and testing firms are considering price adjustments, estimating an increase of between 10% and 20%. The newspaper attributed the information to supply-chain sources, so the increase does not represent a decision officially announced by TSMC. The report concerns CoWoS specifically, not all of the company’s advanced packaging services. The discussion of price adjustments comes as unfilled orders increase and packaging and testing capacity face simultaneous pressure.
The report says demand for advanced packaging is no longer limited to GPUs used in AI applications, but has extended to server processors and custom-designed ASICs. It added that unfilled orders continue to rise as testing of AI chips takes longer. According to the newspaper, the longer testing times are putting pressure on packaging and testing capacity at the same time. Lead times for some packaging services have also lengthened, as pressure on capacity continues to build. Describing the situation, the newspaper reported that "lead times for some packaging services have lengthened, and pressure from tight capacity continues to rise."
The bottleneck also extends to the equipment needed to increase production; the report cited industry executives as saying its lead time has risen to between 6 and 8 months, from between 3 and 6 months. This limits how quickly new capacity can be added as demand for packaging increases. The report estimates that building a new advanced packaging plant takes about 3 years, from the start of construction until the bottleneck stage reaches full capacity. Actual output is determined not only by the plant’s size, but also by the capacity of lithography, development and die-bonding stations. The report said that "actual output depends on the capacity of lithography, development and die-bonding stations," indicating that expanding a new facility does not remove bottlenecks immediately.
TSMC says CoWoS remains customers’ first choice, while packaging solutions equivalent to 5 times the reticle size have entered actual production. The company said on its earnings call that yields for these solutions are good and that it continues to develop larger sizes. Those solutions include a design equivalent to 9 times the reticle size and another equivalent to 14 times, according to the report’s account of the company’s remarks. This path reflects technological expansion taking place alongside current pressure on available capacity. TSMC said that "CoWoS remains customers’ first choice," while confirming that work on larger solutions is continuing.
Investment firms estimated, according to the report, that CoWoS monthly capacity could exceed 130 thousand wafers in 2026 and reach a target of 200 thousand wafers per month in 2027. These are estimates of capacity targets, not a company announcement that those levels have been achieved. On its earnings call published for investors on October 15, Chief Executive C.C. Wei said TSMC is building 13 advanced technology and advanced packaging plants in Taiwan over the coming years, in addition to 5 to 6 plants outside Taiwan. These plans place capacity expansion among investments across multiple locations, while equipment lead times and production-station requirements remain factors determining when output can be added. Wei said that "the company is building 13 advanced technology and advanced packaging plants in Taiwan over the coming years, in addition to 5 to 6 plants outside Taiwan."
Third-quarter results provide context for the scale of the company’s business: TSMC reported revenue of 46.72 billion dollars, up 41.2% year over year and 16.2% from the previous quarter. It also said advanced technologies, which it defines as 7 nanometers and below, accounted for 79% of total wafer revenue in the quarter. Net income was 763.06 billion Taiwan dollars, up 68.7% year over year. Reuters had reported before the results announcement that analysts said demand for TSMC’s AI chip manufacturing capacity and CoWoS technology remained strong. At the latest close available before the report was published, TSM stood at 424.37 dollars on October 26, compared with 418.51 dollars on October 23.
Looking ahead, TSMC said risk production for its A14 technology is on track in 2027, with mass production scheduled to begin in 2028. The company also forecast on October 15 that gross margin in the fourth quarter of 2026 would be between 65% and 67%, compared with 66.4% in the third quarter. CoWoS monthly capacity is estimated to rise to more than 130 thousand wafers during 2026, with a target of 200 thousand wafers in 2027, according to the investment firms whose estimates were cited in the report. The potential price increase, as reported by Commercial Times, remains tied to deliberations described by industry sources. TSMC has not officially confirmed the increase in the available information.