Written by: Rita

The market is concerned about a slowdown in AI chip demand, yet UBS has raised its forecast for the capacity of chips on substrates (CoWoS) by the end of 2027 from 260kwpm (thousand wafers per month) to 270kwpm. UBS noted in its global input-output semiconductor report published on September 22, 2026, that current visibility indicates a need for further expansion by 2028. Even if Intel EMIB-T and TSMC CoPoS ramp up from 2028 to 2029, the demand for ASIC and CPU will primarily remain within the CoWoS system.

The market focuses on TSMC's capacity numbers, with the increase driven by the demand for wafers from ASIC and CPU. UBS has raised the share of ASIC in CoWoS wafer demand, while the share of GPU has been correspondingly lowered. The shipment estimates for Broadcom, Marvell, Nvidia, and AMD have also been revised upwards.

ASE's expansion pace is more aggressive

The capacity of the CoWoS industry is expected to reach 160kwpm by the end of 2026. TSMC remains the main player, with CoWoS capacity reaching 180kwpm by the end of 2027. ASE expands from 20kwpm by the end of 2026 to 70kwpm by the end of 2027, with a pace of expansion that is more aggressive than TSMC. Amkor maintains at 20kwpm. UBS believes that ASE's expansion reflects an improvement in outsourced semiconductor assembly and testing (OSAT) capabilities, and that the demand for large-size packaging is also increasing.

The accelerated expansion of OSAT is already showing its impact on packaging prices. UBS noted that during ASE's capacity tripling process, the bargaining power for advanced packaging quotes is shifting from foundries to OSAT. TSMC still holds the largest share of capacity in 2027, with OSAT's share of increment capacity rising from 12% in 2026 to 26% in 2027. In the wafer-level packaging (WoS) segment, TSMC may introduce new OSAT partners by 2028 to increase mass production sources beyond ASE.

Broadcom and Marvell take on ASIC ramp-up

Google's TPU and Amazon's Trainium are the two main drivers of ASIC demand. UBS expects the packaging volumes in 2027 to reach 9 million and 3.2 million units, respectively, compared to 4.1 million and 2.5 million units in 2026. Broadcom takes on Google TPU, while Marvell takes on Amazon Trainium, together accounting for approximately 18% of the ASIC demand. The share of ASIC in CoWoS wafer demand is projected to be 41% in 2024, decrease to 28% in 2025, rebound to 30% in 2026, and is expected to reach 33% in 2027.

Microsoft's Maia 300 has demonstrated competitive performance, and UBS estimates that Maia 200 and 300 will ship 50,000 and 350,000 units in 2027, respectively, with a total of about 100,000 units across all Maia models in 2026. OpenAI's Jalapeno may increase from 150,000 units in 2026 to 600,000 to 700,000 units in 2027. Meta's MTIA aims for about 450,000 units by 2027, with lower visibility compared to Microsoft and OpenAI. Broadcom's share advantage in the custom chip space continues to expand during this round of ASIC ramp-up, with Broadcom expected to take on about 5 million units of the 9 million TPU packaging volume in 2027.

Nvidia and AMD adjust production upwards

Nvidia has also adjusted its production estimates upwards. UBS raised the AI GPU production forecast for 2027 from 8.2 million units to 8.8 million units, reflecting an increase in Rubin's estimates and around 200,000 units of Rubin CPX. The Rubin Ultra packaging architecture is similar, and with the reduction of high bandwidth memory (HBM) specifications, ramp-up in mid-2027 might be smoother. Nvidia's share in CoWoS wafer demand is expected to decrease from 65% in 2025 to 49% in 2027, with absolute shipment volumes still growing, while the share decline is due to ASIC ramp-up being faster.

AMD's CoWoS demand has been increased by 11%. The shipment of Venice server CPUs is expected to reach 5 million units in 2027, up from a previous estimate of 4 million units. AMD's accelerator supply remains tight at 1.9 million units. AMD's share in CoWoS wafer demand has increased from 6% in 2025 to 18% in 2027, showing the largest increase among GPU and ASIC manufacturers. UBS maintains a rating of outperform for Nvidia, AMD, and Broadcom.

TSMC's backend sales share increases

UBS expects that the revenue from advanced packaging and testing will account for 12% of TSMC's total sales in 2026 and 16% in 2027. Advanced packaging sales are expected to maintain a compound annual growth rate of about 50% from 2026 to 2030, even in the face of competition from Intel EMIB. UBS has a buy rating on TSMC, with a target price of NT$3,650. TSMC is the most directly benefitting foundry from this round of CoWoS expansion, with its pricing power and capacity allocation determining the shipment pace of Nvidia, AMD, Broadcom, and Marvell.

On the equipment side, UBS lowered the target price for GPTC from NT$5,000 to NT$4,300, maintaining a buy rating. The downgrade reflects a reduction in the number of tools confirmed for sales in 2026 and a downward adjustment of ASP assumptions, with EPS estimates for 2026, 2027, and 2028 lowered by 25%, 21%, and 8% respectively. UBS believes that GPTC remains a key beneficiary of advanced packaging expansion, and the valuation remains at 33 times the average PE for 2027 to 2028. ASMPT is listed in Hong Kong and is a device-related target accessible to US investors.

UBS's allocation recommendations for the CoWoS supply chain focus on three directions. On the US stock chip side, Nvidia, AMD, Broadcom, and Marvell are represented; on the foundry side, TSMC represents; and on the equipment side, ASMPT represents. The ramp-up pace of ASIC customers is a key variable for whether capacity will be revised upwards again in 2028. The visibility of orders from Google and Amazon that Broadcom and Marvell undertake can better reflect the real strength of ASIC demand than the production adjustment of Nvidia's single customer.

Disclaimer

This article is the整理与解读 of the third-party brokerage research report (UBS Group, September 22, 2026) by潮向研究, combined with整理 of public market information. The ratings, target prices, profit forecasts, and related judgments quoted in the article are the opinions of the brokerage's analysts and represent only the position of their respective institutions, not the views of潮向研究, nor do they constitute any investment advice.

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