TSMC 3nm, 2nm and CoWoS Stay Tight as Advanced Packaging Becomes the Industry's Binding Constraint
TSMC's leading-edge nodes and CoWoS advanced packaging remained in short supply through the third quarter as customer orders and front-end/back-end supply models shifted, while the foundry works to raise monthly CoWoS output to roughly 120,000-140,000 wafers by late 2026.
DIGITIMES reported on September 15 that TSMC's 3nm, 2nm and CoWoS advanced packaging capacity remained in short supply late in the third quarter of 2026, as changes in major customer orders and in front-end and back-end supply models prompted the foundry to reallocate advanced capacity. Orders from AWS, MediaTek and TPU programmes are among the drivers of that reallocation. The constraint is no longer simply leading-edge wafer starts; it is the packaging step that turns those wafers into accelerators.
Third-party estimates of the CoWoS build-out illustrate the scale of the catch-up. Industry reporting puts monthly CoWoS output at roughly 75,000 to 80,000 wafers at the end of 2025, rising to a target of about 120,000 to 140,000 wafers per month by late 2026, which would nearly double capacity in a single year. TSMC has committed 10-20% of its 2026 capital expenditure guidance of $60-64 billion to advanced packaging, testing and related capacity, and management has described CoWoS capacity as sold out, with AI accelerator programmes absorbing most of the available output. Alongside CoWoS, the SoIC hybrid-bonding pitch is roadmapped from 9 micrometres today to 3 micrometres by 2027, enabling logic-on-logic stacking.
The equipment layer is where the expansion is visible. A September 24 report citing 247wallst notes CoWoS wafer demand is forecast to rise from 360,000 wafers in 2024 to 810,000 in 2027, an increase of 125%, with 2026 volume up another 40% to 678,000 wafers. Inspection and metrology suppliers are the main beneficiaries: KLA posted fiscal fourth-quarter revenue of $3.66 billion, up 15.2% year on year; Camtek, roughly 75% of whose second-quarter revenue came from advanced packaging, reported $133.2 million, up 10% sequentially, with more than $600 million of orders booked in the first seven months of the year and some deliveries slipping into 2027; and Nova, focused on dimension, film thickness and material composition metrology, posted record second-quarter revenue of $255 million, up 16%.
Packaging is also moving up the value chain into system-level design. In a DIGITIMES interview published September 18, IMAPS Taiwan president Shin-Puu Jeng described advanced packaging as one of the industry's hottest areas in 2026, with co-packaged optics, chiplets and glass substrates increasingly common in Taiwan as packaging shifts toward system-level co-design. The practical implication is that packaging decisions are now made alongside architecture decisions rather than after them, which lengthens qualification cycles for materials and equipment suppliers and raises the cost of a defect found late in the flow.