Advanced Packaging Becomes AI Compute's New Bottleneck as Nvidia Funds ASE Expansion

Key Takeaways

• Nvidia reportedly funds billions of dollars to help SPIL expand CoWoS capacity
• Yole: Advanced packaging capex expected to approach $28 billion in 2026
• onsemi abandons $2 billion Czech SiC expansion, citing changed market conditions

Advanced Packaging: From Supporting Role to Bottleneck

The global race in AI infrastructure is directing capital toward advanced packaging, a segment that previously drew little attention. According to Reuters, TSMC's CoWoS technology has been widely adopted by Nvidia, AMD, Broadcom and cloud giants developing their own AI chips, but tight capacity is forcing chip designers to look for outside help. An industry executive said Nvidia is providing billions of dollars to support SPIL, the packaging and testing subsidiary of ASE Technology Holding, in expanding CoWoS packaging capacity, funding new cleanroom construction and equipment purchases. Nvidia did not respond to a request for comment, and ASE said it does not comment on market rumors involving customers. (Source: IT Home / Reuters)

Market research firm Yole Group forecasts that the advanced packaging market will surpass traditional packaging for the first time in 2026, with related capital expenditure expected to approach $28 billion. Pat Gelsinger, former Intel CEO and now a partner at Playground Global, remarked: "In the past, packaging was always the kind of thing you never had to worry about." (Source: IT Home / Reuters)

The significance of this thread lies in the shift of pricing power: when the delivery pace of the most advanced processors is constrained by packaging capacity, packaging plants' expansion funding begins to be directly supplied by chip designers, and the bargaining structure of the supply chain is changing. However, the funding arrangement remains at the level of market rumor and awaits confirmation from both parties.

Materials: One Step Forward, One Step Back

Diamond materials achieved a size breakthrough. Diamond Foundry announced on Nov 5 local time that it had successfully manufactured the world's first 200mm (8-inch) diamond single crystal. A larger single crystal size means better wafer edge area utilization and higher production efficiency, helping accelerate the commercialization of diamond in semiconductors. Diamond has properties including an ultra-wide bandgap, high carrier mobility, high breakdown field strength and high thermal conductivity, making it an excellent material for power semiconductors and chip cooling devices. (Source: IT Home)

On the other side, silicon carbide showed signs of contraction. onsemi announced on Nov 6 local time that, due to changes in the global SiC market, it was abandoning a planned new SiC production line in Rožnov, Czech Republic, valued at up to $2 billion. The company stressed that the Czech Republic remains an important part of its long-term manufacturing and growth strategy, and that it will continue to produce silicon- or SiC-based semiconductor chips in Rožnov and continue investing and hiring in Rožnov and Brno. Karel Havlíček, Czech first deputy prime minister and minister of industry and trade, said the decision reflects the current state of the global semiconductor market and that existing production will continue as normal. (Source: IT Home)

The contrast shows that capital investment in wide-bandgap materials is diverging: diamond is still in the early validation and size-breakthrough stage, while SiC has entered a capacity adjustment phase more sensitive to supply-demand and price signals.

Other Developments

• BYD's Yangwang Dingyao Executive Edition made its global debut, equipped with the self-developed 4nm Xuanji A3 smart-driving chip, supporting parking-space-to-parking-space navigation and urban navigation, with CLTC range exceeding 1,000 km. (Source: IT Home)
• Coolpad COOL X Wide went on sale, starting at 999 yuan, equipped with MediaTek Helio G99 processor, positioned as the first wide-bar Android phone. (Source: IT Home)
• Edifier W900NB 30th Anniversary Collector's Edition headphones listed, using a 6nm 6-core heterogeneous chip with integrated Arm Ethos U55 NPU, limited to 3,000 sets, priced at 1,159 yuan. (Source: IT Home)

Self-developed chips and mature-node SoCs on the device side continue to land in density, but what truly affected the industry's pace on the day were still the two lines of packaging capacity and materials capital expenditure.