Advanced packaging ($1,100) plus yield loss ($1,000) together exceed logic die fabrication ($900). The challenge isn’t making chips – it’s assembling them reliably. TSMC’s packaging capacity, not its fab capacity, is the binding constraint on AI chip production.
TSMC’s Chip-on-Wafer-on-Substrate (CoWoS) packaging has been the real production bottleneck. CoWoS-L technology integrates a redistribution layer with a partial silicon interposer, enabling the stacking of more HBM around the GPU dies.
The process is extraordinarily complex: each B200 module contains two GPU dies plus multiple HBM stacks, all interconnected on a single substrate.
Capacity Constraints
Current CoWoS capacity: approximately 75,000 wafers per month in 2025, expanding to 95,000 by 2026 and 135,000 by 2027. But demand continues to outpace expansion.
Nvidia has secured over 70% of TSMC’s CoWoS-L capacity for 2025. Orders from Nvidia, AMD, Google, Amazon, and custom ASIC developers are “overflowing,” leaving TSMC with no spare capacity despite aggressive investment.
The Yield Tax
The $430-$1,700 range for packaging yield loss reveals manufacturing sensitivity. Bad yields can nearly double this cost component. Each failed package wastes not just packaging materials but the expensive GPU dies and HBM stacks that went into it.
This makes production economics highly sensitive to process maturity and qualitycontrol.
Key Takeaway
As lithography economics shows, semiconductor bottlenecks have shifted. The binding constraint isn’t leading-edge logic fabs – it’s the advanced packaging that assembles components into working systems.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
