Strong demand for ASICs and CPUs! UBS raises CoWoS industry capacity forecast, expecting significant growth compared to this year

The demand for cloud AI chips continues to exceed expectations, driving the advanced packaging industry into a new expansion cycle.

According to the Chasing Wind Trading Desk, UBS has raised its global CoWoS industry capacity forecast for the end of 2027 from the previous 260,000 wafers per month to 270,000 wafers per month, a significant increase of about 69% compared to the estimated 160,000 wafers per month at the end of 2026. The core driver of this upward adjustment is the strong rise in demand for ASICs and CPUs.

UBS believes that these two types of chips will mainly continue to rely on CoWoS packaging technology from 2028 to 2029, rather than migrating to emerging solutions such as Intel's EMIB-T or TSMC's CoPoS. Meanwhile, the technological evolution towards larger packaging sizes and heterogeneous integration will also consume a significant amount of additional capacity.

CoWoS Capacity Forecast Revised Upward Again, Demand Nearly Doubles by 2027

After participating in a summit in Taiwan and completing an in-depth survey of the CoWoS industry, UBS has further raised its capacity forecast for the industry. According to the latest estimates, global CoWoS total demand in 2027 is expected to reach approximately 2.63 million wafer equivalents, nearly doubling from the estimated 1.321 million wafers in 2026.

In terms of demand structure, NVIDIA remains the largest single customer, with CoWoS wafer demand expected to reach 1.29 million wafers in 2027, but its share will decrease from 60% in 2026 to 49%, reflecting a trend towards diversification of demand sources. The share of ASIC chips is expected to increase from 30% in 2026 to 33% in 2027, while AMD's share is expected to jump from 10% to 18%, mainly driven by the ramp-up of the Venice server CPU.

UBS pointed out that even if Intel's EMIB-T and TSMC's CoPoS begin to provide capacity for large AI accelerator packaging in 2028 to 2029, the current visibility still indicates that further expansion of CoWoS capacity will be needed in 2028, highlighting the continued strong demand.

ASIC Projects Accelerate Implementation, Progress Exceeds Expectations for Several Major Cloud Providers

After several years of investment, the custom chip projects of major hyperscale cloud providers and AI-native companies are accelerating towards realization.

In terms of accelerator chips, Microsoft's Maia 300 has competitive performance, and UBS expects shipments of Maia 200/300 to reach 50,000/350,000 units in 2027, significantly increasing from the total of about 100,000 Maia units in 2026. OpenAI's Jalapeño chip is expected to see shipments increase from 150,000 units in 2026 to 600,000 to 700,000 units in 2027. Meta's MTIA aims for a target shipment of about 450,000 units, but visibility is relatively low. Google's TPU and Amazon's Trainium are progressing as planned, with UBS expecting their packaging volumes to reach 9 million and 3.2 million units respectively in 2027, a significant increase from 4.1 million and 2.5 million units in 2026.

In terms of CPUs, the ramp-up of AMD's Venice server CPU is an important driver for this upward adjustment. UBS has raised its forecast for AMD's CoWoS demand in 2027 by 11%, expecting Venice CPU shipments to reach 5 million units, higher than the previous estimate of 4 million units Regarding NVIDIA, UBS has raised its forecast for AI GPU production in 2027 from 8.2 million units to 8.8 million units, incorporating an additional forecast of approximately 200,000 Rubin CPX units; Rubin Ultra is expected to ramp up production more smoothly starting in mid-2027 due to similar packaging architecture and adjustments in HBM specifications.

Supply-side diversification accelerates, non-TSMC capacity rapidly expands

The supply landscape for CoWoS is accelerating its diversification. UBS expects ASE's CoW capacity to expand significantly from 20,000 wafers per month at the end of 2026 to 70,000 wafers per month by the end of 2027, with the expansion effort clearly exceeding previous expectations; TSMC and Amkor's CoW capacities are expected to be 180,000 wafers per month and 20,000 wafers per month, respectively.

In the WoS segment, UBS recently pointed out that TSMC may introduce new OSAT partners for mass production in 2028 based on its existing collaboration with ASE, further broadening supply sources.

The growth momentum of TSMC's backend business is also noteworthy. UBS expects TSMC's advanced packaging sales to maintain a compound annual growth rate of about 50% from 2026 to 2030, even in the face of competitive pressure from Intel's EMIB. Specifically, the backend business (including advanced packaging) is expected to increase its share of TSMC's total revenue from approximately 12% in 2026 to about 16% in 2027.

UBS believes that the rapid expansion of advanced packaging capacity and the increasing complexity of packaging structures will provide direct benefits to key equipment suppliers