Nvidia Locks in Over 70% of TSMC’s Advanced Packaging Capacity for 2025

Nvidia has secured more than 70% of TSMC’s advanced chip packaging capacity for 2025, according to Taiwanese media reports. This move comes as rising artificial intelligence (AI) demand drives the need for cutting-edge semiconductor technology, particularly for Nvidia’s upcoming Blackwell AI chips.

Surge in AI-Driven Chip Demand

Citing unnamed industry sources, the Economic Daily revealed that Nvidia’s strong demand for its next-generation Blackwell AI chips has enabled the tech giant to contract over 70% of TSMC’s "Chip on Wafer on Substrate" (CoWoS) capacity—with silicon interposer technology—for the upcoming year. This development highlights the escalating need for high-performance chips designed to power AI applications.

TSMC: The World’s Leading Contract Chipmaker

TSMC stands as the sole mass-market provider of advanced chip packaging processes, which integrate multiple semiconductors into a single device during fabrication. As the largest contract chipmaker globally, TSMC’s unique capabilities are critical in meeting the surging demand for AI data centre chips—a trend that has already seen Nvidia secure at least 60% of TSMC’s capacity for 2025 in late 2024.

Implications for the Semiconductor Industry

The growing demand for AI chips is bolstered by recent earnings reports from major players like Microsoft, Google, Meta, and Amazon, all of whom are significantly increasing capital spending on AI infrastructure. This trend is expected to drive further demand for both Nvidia’s innovative chips and TSMC’s advanced manufacturing and packaging operations. TSMC’s recent stellar fourth-quarter earnings have paved the way for a planned ramp-up in production capacity throughout 2025, positioning the company to capitalise on the expanding AI market.

A Key Indicator Ahead of Nvidia’s Earnings

This significant capacity deal comes just days before Nvidia’s fourth-quarter earnings release, set for Wednesday. Investors and industry watchers are keenly anticipating the earnings report, which is expected to serve as a bellwether for broader trends in the AI and chipmaking industries.

With Nvidia’s strategic contract and TSMC’s manufacturing prowess, the semiconductor landscape is set for robust growth as AI technology continues to advance and reshape the tech industry.

(Sources: investing.com, reuters.com, ChatGPT)