UBS has sharply raised its forecast for TSMC CoWoS advanced package capacity, projecting 2027 demand will nearly double from 2026 levels.

Global cloud AI chip demand continues to outpace market expectations, and the advanced packaging industry is entering a new expansion cycle. UBS has raised its forecast for global CoWoS capacity at end-2027 to 270,000 wafers per month, up 69% from the 160,000 wafers per month projected for end-2026. The core driver is strong demand for application-specific integrated circuits (ASICs) and CPUs, both of which are expected to rely primarily on CoWoS packaging through 2028–2029 rather than migrating to alternatives such as Intel's EMIB-T or TSMC's CoPoS. Continued expansion of package sizes and heterogeneous integration trends are consuming significant additional capacity.

**2027 Total Demand Nearly Doubles; Customer Mix Diversifies Rapidly**

UBS raised its capacity forecast after attending the Taiwan summit and completing an in-depth CoWoS industry survey. Global CoWoS total demand is projected to reach approximately 2.63 million wafer equivalents in 2027, nearly double the 1.321 million wafers estimated for 2026.

Nvidia remains the largest single customer, with 2027 CoWoS wafer demand projected at 1.29 million wafers. However, its share is expected to decline from 60% in 2026 to 49%, reflecting an increasingly diversified customer base. ASIC-type chips are expected to rise from 30% to 33% of total demand. AMD's share jumps from 10% to 18%, driven primarily by the ramp-up of its Venice server CPU.

| Customer Type | 2026 Share | 2027 Share | 2027 Wafer Demand (10,000 units) |

|---|---|---|---|

| Nvidia | 60% | 49% | 129 |

| ASIC-type | 30% | 33% | ~87 |

| AMD | 10% | 18% | ~47 |

*Note: Absolute 2027 wafer demand figures for ASIC-type and AMD are derived from total demand of 2.63 million wafers and the respective share percentages; UBS's report did not disclose these figures separately.*

Even as Intel's EMIB-T and TSMC's CoPoS begin providing capacity for large AI accelerator packaging in 2028–2029, current visibility indicates that further CoWoS capacity expansion will be required in 2028, underscoring sustained demand strength.

**Custom Chip Programs Accelerate; CPU Becomes a New Growth Engine**

After years of investment, custom chip programs at major hyperscale cloud providers and AI-native companies are accelerating toward commercialization. Microsoft's Maia 300 delivers competitive performance, with UBS expecting Maia 200 and Maia 300 shipments of 50,000 and 350,000 units respectively in 2027, up significantly from roughly 100,000 total Maia units in 2026. OpenAI's Jalapeño chip shipments are projected to grow from 150,000 units in 2026 to 600,000–700,000 units in 2027. Meta's MTIA targets approximately 450,000 units, though visibility remains relatively low.

Google's TPU and Amazon's Trainium are progressing on schedule, with 2027 packaging volumes projected at 9 million and 3.2 million units respectively, up from 4.1 million and 2.5 million units in 2026.

AMD's Venice server CPU ramp-up is a key driver of the upward revision. UBS raised its 2027 CoWoS demand forecast for AMD by 11%, projecting Venice CPU shipments of 5 million units, up from 4 million units previously. For Nvidia, the firm raised its 2027 AI GPU production estimate from 8.2 million to 8.8 million units and added a forecast of approximately 200,000 Rubin CPX units. Rubin Ultra is expected to ramp smoothly from mid-2027 onward, given its similar packaging architecture and adjusted HBM specifications.

**Supply Landscape Diversifies; TSMC's Backend Business Share Climbs**

The CoWoS supply landscape is undergoing significant change. ASE Technology Holding is expected to expand its CoW capacity sharply from 20,000 wafers per month at end-2026 to 70,000 wafers per month at end-2027, far exceeding prior expectations. TSMC and Amkor's CoW capacity at end-2027 is projected at 180,000 and 20,000 wafers per month respectively.

On the WoS front, TSMC may introduce a new outsourced semiconductor assembly and test (OSAT) partner for volume production in 2028, building on its existing ASE collaboration and broadening the supply base further.

TSMC's backend business is gaining momentum. UBS expects advanced packaging sales to sustain a compound annual growth rate of approximately 50% from 2026 to 2030, despite competitive pressure from Intel's EMIB. The backend business (including advanced packaging) as a share of TSMC's total revenue is projected to rise from roughly 12% in 2026 to approximately 16% in 2027.

The rapid expansion of advanced packaging capacity and increasing complexity of packaging structures should benefit key equipment suppliers. Equipment, materials, and OSAT segments across the CoWoS supply chain are positioned to capture incremental orders during this expansion cycle. Investors should monitor the pace of penetration of alternatives such as Intel's EMIB-T and TSMC's CoPoS after 2028, as well as actual progress of major cloud providers' in-house chip programs.