Mizuho Raises TSMC CoWoS Capacity Outlook

Mizuho Securities Asia upgraded its forecast for Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (TW:2330, NYSE:TSM) monthly CoWoS (chip‑on‑wafer‑on‑substrate) packaging capacity to 140,000 units in 2026 and 190,000‑200,000 units in 2027, up from its prior estimates of 120,000 and 170,000‑180,000 units respectively. The revision stems from a sharply upgraded outlook for AI‑driven server CPU demand, prompting a broader revision of TSMC’s semiconductor supply model.

Server CPU Demand Drivers

Mizuho analyst Kevin Wang stated that server CPU demand for AI applications—including both x86 and ARM‑based designs—is expected to grow above 50% year‑on‑year in 2027. ARM‑based server CPUs are projected to more than double in 2027 versus 2026. The demand surge is attributed to products such as Nvidia’s Vera CPU, Intel and AMD server CPUs, and the server‑CPU programs of cloud‑service providers Google, AWS, Microsoft and Meta.

Customer‑Specific CoWoS Unit Forecasts

  • Nvidia: 630,000 CoWoS units in 2026, rising to 1,005,000 units in 2027, driven by Vera CPU production in 2026‑27 and the Rubin architecture ramp in 2027.
  • Broadcom: Forecast trimmed to 425,000 units in 2027 (down from 450,000).
  • MediaTek: Forecast nearly doubled to 180,000 units in 2027 from 93,000, reflecting stronger Google TPU demand.

Advanced‑Node Capacity Projections

  • N3 node: Monthly capacity to reach 170,000 units by 2026 and 200,000 units by 2027.
  • N2 node: Projected at 90,000 units in 2026, 150,000 in 2027, and 200,000 in 2028.
  • A14 node: Expected to hit 15,000 units per month in 2027 and 40,000 units per month in 2028, indicating meaningful production of the most advanced silicon generations well before decade‑end.

Server‑CPU Production Volume Estimates (2027)

  • Nvidia Vera CPU: >7 million units
  • AMD Venice CPU: 5 million units
  • Google CPU: >4 million units
  • AWS CPU: >3 million units
  • Microsoft CPU: ≈1 million units
  • Meta CPU: 100,000‑200,000 units

Packaging Ecosystem Capacity Expansion

  • ASE (Advanced Semiconductor Engineering): Monthly CoWoS capacity forecast to reach 20,000 units in 2026 and 40,000‑45,000 units in 2027, primarily serving AMD Venice and Nvidia Vera programs.
  • Amkor Technology: Monthly CoWoS capacity projected at 20,000‑25,000 units by end‑2027, covering Nvidia Vera, GB10, LPU, Broadcom switch, and GUC Microsoft CPUs.
  • Mizuho rates both ASE (BUY; price objective TWD 570) and ASMPT (BUY; price objective HKD 280) as beneficiaries of the packaging trend.

Equipment Procurement Outlook

  • CoW thermal compression bonding (TCB) orders observed from ASE/SPIL in March and from TSMC in April.
  • Mizuho expects TSMC and ASE/SPIL combined to procure >130 TCB units from Shibaura in 2026.
  • TSMC plans to place 50‑80 flux‑less TCB orders with either K&S or ASMPT in H2 2026 and H1 2027, indicating continued equipment capex despite tightening lead times.

Interconnect Yield and Intel Activity

  • Intel’s EMIB‑T interconnect yield has surpassed 95%, and Intel is in customer discussions with MediaTek, Ampere Computing, AWS, and Tesla for technology adoption.

Ratings and Forward Catalysts

  • Mizuho maintains a BUY rating on TSMC with a price target of TWD 3,000.
  • ASML Holding NV is also rated BUY with a price target of EUR 2,000.
  • Key forward catalysts include the successful ramp of Nvidia Vera CPU and Rubin production, acceleration of CSP silicon programs at Google and AWS, and sustained N2 yield improvements supporting capacity expansion through 2027‑2028.