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NVIDIA's Strategic Shift Hits TSMC Revenue as CoWoS-S Orders Plummet

Word on the StreetWednesday, Jan 15, 2025 7:01 am ET

1min read

Recent reports have suggested that NVIDIA is significantly reducing its orders for TSMC's advanced CoWoS-S packaging, attributed to a halt in the production of the Hopper chips and limited demand for the GB200A and GB300A chips. This reduction is expected to free up CoWoS-S production capacity, and NVIDIA's orders are projected to drop by 50,000 wafers per month, potentially impacting TSMC's revenue by 1% to 2%.

Despite the initial market concerns leading to a sell-off in AI-related stocks, CoWoS-S suppliers were quick to refute these claims. Even so, the news affected TSMC's stock, with a noticeable decline in its market performance.

Analysts from various financial institutions have confirmed through industry checks that NVIDIA is indeed cutting its CoWoS-S orders with TSMC and UMC by as much as 80% due to the ongoing shift in its product strategy. This strategic recalibration stems from changes in NVIDIA’s latest Blackwell architecture, resulting in a decreased need for CoWoS-S in the upcoming years.

A key factor influencing this decision is the conclusion of Hopper chip production. Meanwhile, the demand for GB200A and the slower-than-expected uptake of GB300A have also led to a reevaluation of future CoWoS-S orders, which are projected to be drastically cut by 2025.

Furthermore, NVIDIA is shifting part of its focus towards CoWoS-L packaging, which is touted for its superior performance. As such, some of the GB300A production is expected to transition to CoWoS-L processes, according to industry analysts.

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