CoWoS advanced-packaging semiconductor supply chain: ASICs and CPUs are set to drive a stronger, more diversified CoWoS expansion through 2027-28

Overview

This UBS semiconductor-industry report argues that cloud-AI demand is broadening beyond GPUs toward custom ASICs and server CPUs, requiring more CoWoS advanced-packaging capacity in 2027-28. It expects both capacity expansion and supply diversification to support foundry, packaging, design-service and equipment suppliers.

Core views

UBS raises its end-2027E CoWoS industry-capacity forecast to 270kwpm from 260kwpm, compared with 160kwpm at end-2026E. The institution sees a further need for expansion in 2028 even as Intel's EMIB-T and TSMC's CoPoS ramp for large AI-accelerator packages in 2028-29. Its core argument is that cloud-AI chip demand is becoming more robust and more diversified: CPUs and ASICs should continue to rely mainly on CoWoS in 2028-29, while larger heterogeneous packages consume substantially more packaging capacity. UBS expects the supply base to diversify as outsourced semiconductor assembly and test providers improve their capabilities and the market requires more capacity. For CoW, it forecasts ASE expanding to 70kwpm by end-2027E from 20kwpm at end-2026E, versus end-2027E CoW capacity of 180kwpm for TSMC and 20kwpm for Amkor. For WoS, UBS expects TSMC potentially to add a new OSAT partner for mass production in 2028, in addition to its collaboration with ASE. The demand case rests heavily on progress in custom silicon by hyperscalers and AI-native companies. UBS estimates Microsoft's Maia 200/300 units at 50k/350k in 2027, after roughly 100k total Maia units in 2026. It expects OpenAI's Jalapeno to ramp to 600k-700k units in 2027E from 150k in 2026E, while Meta's MTIA could reach about 450k units, albeit with lower visibility than Microsoft and OpenAI. Google TPU and Amazon Trainium packages are projected to reach 9m and 3.2m, respectively, in 2027, from 4.1m and 2.5m in 2026E. UBS's ASIC supply-chain build forecast rises to 13.66m units in 2027E from 7.10m in 2026E, led by Google TPU, MediaTek-related Google TPU demand, and Amazon Trainium supplied through Alchip. The report also raises expectations for GPU and CPU-related demand. Nvidia's 2027 AI GPU production forecast increases from 8.2m to 8.8m units, reflecting higher Rubin estimates and around 200k Rubin CPX units. UBS expects Rubin Ultra, which has a similar package architecture and reduced HBM specifications, to ramp more smoothly and quickly from mid-2027. For AMD, UBS raises 2027E CoWoS demand by 11% as it expects Venice server CPU volume to reach 5m units rather than its prior 4m estimate. It retains its 2027E AMD accelerator forecast at 1.9m units because supply remains tight. UBS identifies TSMC, MediaTek and ASE as leading cloud-AI supply-chain ideas: TSMC as the leading cloud-AI foundry, MediaTek for Google TPU design services and new ASIC opportunities, and ASE for advanced packaging and testing. It estimates TSMC backend activities, including advanced packaging, will represent about 12% of sales in 2026E and 16% in 2027E, with advanced-packaging sales growing at roughly 50% CAGR over 2026-30E despite Intel EMIB competition. The firm also favors advanced-packaging equipment suppliers All Ring, GPTC, Chroma, Hon Precision and ASMPT because larger and more complex packages require more specialized tools. For GPTC, UBS cuts its target price to NT$4,300 from NT$5,000 while retaining a 33x average 2027-28E P/E valuation basis and maintaining Buy. It reduces GPTC EPS estimates by 25%, 21% and 8% for 2026E, 2027E and 2028E, respectively, due to lower tool-unit sales recognition in 2026 and a lower assumed average selling price. Nevertheless, UBS expects GPTC to remain a key beneficiary of advanced-packaging capacity expansion. Its revised GPTC revenue forecasts are NT$8,072m, NT$13,052m and NT$20,473m for 2026E-2028E, with revised EPS of NT$58.90, NT$98.17 and NT$162.32.

Analysis framework

UBS combines estimated CoWoS supply capacity with projected chip build volumes for GPUs, custom ASICs and CPUs. It then links packaging demand to foundry, OSAT, design-service and equipment suppliers, while applying earnings revisions and a forward P/E framework to GPTC.

Methodology notes

• Industry AnalysisSupply-demand framework

  CoWoS capacity and demand analysis

  The report compares projected CoWoS capacity with chip-volume demand from GPUs, ASICs and CPUs to assess the need for additional advanced-packaging investment.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Cloud-AI semiconductor supply-chain transmission

  UBS traces higher AI-chip demand through foundry production, advanced packaging and testing, design services, and packaging-equipment suppliers.

• Valuation methodsP/E and PEG Valuation

  P/E valuation for GPTC

  UBS values GPTC using the same 33x average 2027-28E P/E multiple while revising its earnings assumptions and target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• TSMC (2330.TW)

  Leading cloud-AI foundry expected to benefit from rising CoWoS and advanced-packaging demand.

  Strengths

  UBS expects advanced packaging sales to sustain roughly 50% CAGR in 2026-30E.

  Weaknesses

  Faces competition from Intel EMIB.

  Comparison

  Expected end-2027E CoW capacity of 180kwpm versus ASE at 70kwpm and Amkor at 20kwpm.

  Risks

  Slower-than-expected CoWoS expansion or weaker AI demand.

• MediaTek (2454.TW)

  Design-services supplier for Google TPU with a new ASIC opportunity.

  Strengths

  Google TPU-MediaTek build units are projected at 4.0m in 2027E.

  Comparison

  MediaTek's share of CoWoS wafer demand is estimated at 7% in 2027E.

  Risks

  Custom ASIC program execution and cloud-AI demand uncertainty.

• ASE (3711.TW)

  Advanced packaging and testing beneficiary of higher CoWoS demand and supply diversification.

  Strengths

  UBS expects aggressive CoW expansion to 70kwpm by end-2027E.

  Comparison

  ASE is part of non-TSMC CoWoS capacity alongside Amkor.

  Risks

  Slower capacity expansion or technology advances by competitors.

• GPTC (3131.TWO)

  Advanced-packaging equipment supplier expected to benefit from capacity expansion.

  Strengths

  UBS expects it to be a key beneficiary of advanced-packaging investment.

  Weaknesses

  2026E-2028E EPS estimates are cut by 25%, 21% and 8% due to lower tool-unit sales recognition and lower ASP assumptions.

  Comparison

  UBS values GPTC on a 33x average 2027-28E P/E multiple.

  Risks

  Slower CoWoS expansion, competitor technology advances, geopolitical uncertainty and weaker-than-expected AI growth.

• Alchip (3661.TW)

  ASIC design-services beneficiary through Amazon Trainium3 and Trainium4 opportunities.

  Strengths

  Amazon Trainium-Alchip build units are projected at 3.08m in 2027E.

  Risks

  Custom-silicon program execution and AI-demand uncertainty.

Key data

• CoWoS industry capacity270kwpm by end-2027ERaised from 260kwpm; compared with 160kwpm at end-2026E.
• ASE CoW capacity70kwpm by end-2027EUp from 20kwpm at end-2026E.
• ASIC supply-chain build units13.66m in 2027EUp from 7.10m in 2026E.
• Nvidia AI GPU production8.8m units in 2027Raised from UBS's prior 8.2m-unit forecast.
• AMD Venice server CPU volume5m units in 2027ERaised from UBS's prior 4m-unit estimate; 2027E CoWoS demand rises 11%.
• TSMC advanced packaging sales growth~50% CAGR in 2026-30EUBS expects advanced packaging to represent about 12% and 16% of TSMC sales in 2026E and 2027E.
• GPTC target priceNT$4,300Reduced from NT$5,000; Buy maintained.

Impact & implications

UBS sees expanding and increasingly diversified CoWoS demand as favorable for the cloud-AI semiconductor supply chain, especially advanced packaging, testing, design services and equipment. The report expects the shift toward larger, heterogeneous packages to increase capacity intensity even as alternative packaging technologies begin to ramp.

Risks

• CoWoS capacity expansion could be slower than UBS expects.
• Competitors could achieve technological advances that weaken current beneficiaries.
• Geopolitical uncertainty could disrupt the semiconductor supply chain.
• AI growth could be weaker than expected.

What to watch

• Progress in CoWoS capacity additions and OSAT participation through 2027-28.
• Volume ramps for Microsoft Maia, OpenAI Jalapeno, Google TPU, Amazon Trainium and Meta MTIA.
• Nvidia Rubin and Rubin Ultra production ramps from mid-2027.
• AMD Venice server CPU demand and continued tight accelerator supply.
• GPTC tool-unit sales recognition and average selling-price trends.