TAIPEI, November 6, 2026 — The global demand for artificial intelligence infrastructure is driving a significant shift in the semiconductor industry, with chipmakers investing billions in advanced packaging to overcome critical production bottlenecks. As a result, advanced packaging revenue is forecast to exceed traditional methods for the first time in 2026, with capital spending on the technology expected to reach nearly $28 billion.
Advanced Packaging: A Critical Component
The science behind advanced packaging is intriguingly complex, allowing multiple chips, such as processors and memory, to function as a single, faster system. This is particularly important for AI chips, which require high-speed data processing and transfer between processors and nearby memory. Advanced packaging enables this by linking separate pieces of silicon on a shared base, allowing them to work together at high speed.
TSMC’s Dominance And The Emergence Of Alternatives
TSMC currently dominates the CoWoS (chip-on-wafer-on-substrate) packaging market, a technology widely used by Nvidia, AMD, and Broadcom. However, TSMC’s capacity limits have spurred some chip designers to seek additional supply, with Nvidia providing billions in financing to expand CoWoS capacity at SPIL, a unit of ASE Technology. Meanwhile, Powertech Technology is developing panel-level packaging as a potential alternative to TSMC’s technology, with plans to invest $400 million in a joint venture with Broadcom in Singapore.
Future Outlook
The market for advanced packaging, including panel-level technology, is expected to grow significantly within three to five years, according to an official of US equipment maker Applied Materials. As the industry continues to evolve, it will be interesting to see how the $28 billion advanced packaging market unfolds. With production at Powertech’s joint venture with Broadcom expected to begin in 2028, the future of advanced packaging looks promising, with TSMC also developing its own panel-based technology, called chip-on-panel-on-substrate, or CoPoS, with production expected to begin within a couple of years.
As former Intel chief executive Pat Gelsinger noted, “Packaging was always that thing that you just didn’t worry about.” However, with the growing importance of advanced packaging in the semiconductor industry, it is clear that this is no longer the case. As the industry continues to invest in advanced packaging, it will be essential to understand how it works and the science behind it. With the market expected to reach $28 billion, it is an exciting time for the industry, and one that will be closely watched by those in the electronics and semiconductor sectors. The next development in this space is expected to be the production start at Powertech’s joint venture with Broadcom in 2028.
Sources
- FOCUS-AI boom turns chip packaging into the next battleground for semiconductors
- AI boom turns chip packaging into the next battleground for semiconductors
Photo: Mti / wikimedia (CC BY-SA 3.0)
