TSMC’s production capacity is reaching its limits, meaning the company no longer has enough margin to meet AMD’s packaging needs. Nvidia eats up most of the capacity, so AMD has to look for alternatives.

AMD is looking for alternative partners for its CoWoS needs. The chip designer is currently joining TSMC, but the manufacturer is reaching its capacity limits and has to keep promises to its competitor Nvidia. This could be a problem for the availability of its Instinct MI300 accelerators.

CoWat?

CoWoS stands for Chip-on-wafer-on-substrate and is a so-called PackagingTechnology that involves the way a chip is assembled from various components. CoWoS efficiently assembles separately manufactured chips into a whole, with very little spacing between components. This has a direct impact on the performance of the entire chip. The technology is an essential building block for the AMD Instinct MI300 accelerators.

However, Nvidia is also relying on CoWoS and it seems that Nvidia has purchased the necessary capacity from TSMC. In order for the MI300A and MI300X to be produced in sufficient quantities, AMD must look for alternative CoWoS providers. Please note: The capacity issues appear to be related to packaging only. The production of the individual chips on the TSMC nodes takes place separately.

Production volume

In order to have a real impact on the AI ​​market, it is important that AMD’s accelerators roll off the production line in sufficient quantities. Today, demand for AI accelerators exceeds supply, and Nvidia takes most of the pie. AMD needs to increase the overall availability of accelerators with its solutions if it wants to play a significant role. Solving the CoWoS bottleneck is important for this. We don’t know which alternative provider AMD will work with.