TSMC has for the first time outsourced the silicon interposer, a critical component of its advanced AI packaging technology CoWoS, to US foundry GLOBALFOUNDRIES Inc. (GFS) — a five-year, $2 billion long-term agreement that extends the production capacity of this key link in the AI chip packaging supply chain from local Taiwanese suppliers to US soil.

Under the agreement recently announced by Taiwan Semiconductor Manufacturing (TSM) with GLOBALFOUNDRIES, TSMC will commission GLOBALFOUNDRIES to produce silicon interposers required for CoWoS at its facility in New York State, with volume ramp-up expected in the first half of 2028. The agreement spans five years and carries a total value of up to $2 billion (nearly NT$64 billion).

Institutions believe this long-term contract reveals that AI is driving strong demand for silicon interposers in advanced packaging, and that TSMC is expanding outsourced orders to ensure adequate silicon interposer capacity. Signing a long-term silicon interposer supply agreement is effectively a bullish bet on the future of silicon interposers, underscoring continuously expanding demand for critical AI packaging components.

Taiwan's two major mature-node foundries, United Microelectronics Corporation and Powerchip Semiconductor Manufacturing Corporation, are actively positioning themselves in silicon interposers and accelerating capacity expansion. By awarding its largest outsourced order to a US-based foundry, TSMC has added a US-based production source for silicon interposers beyond Taiwan's local capacity.

A $2 Billion Long-Term Contract: Silicon Interposers Head to New York State

The silicon interposer is a vital bridge connecting AI processors with high-bandwidth memory (HBM), enabling high-speed data transmission between different chips within the same package through high-density wiring. As AI chips integrate more memory and computing units, packaging area and interconnect requirements rise in tandem, driving demand for interposer technology and capacity.

TSMC's decision to have GLOBALFOUNDRIES produce silicon interposers in New York State is a continuation of its advanced packaging capacity expansion and outsourcing strategy. TSMC's CoWoS capacity has already doubled for three consecutive years, and the company has outsourced the CoW process within CoWoS to packaging and testing firms such as ASE Technology Holding, in order to cope with capacity pressure from surging AI chip demand. Now, by including the silicon interposer — a critical link — in its outsourcing arrangements, TSMC is further extending its capacity reach to US soil.

Motivation for Outsourcing: Ensuring Adequate Capacity, Locking in Supply with a Five-Year Contract

Institutions believe this reveals that AI is driving strong demand for silicon interposers in advanced packaging, and that TSMC is expanding outsourced orders to ensure adequate silicon interposer capacity.

Market analysts also note that TSMC's signing of a long-term silicon interposer supply agreement with GLOBALFOUNDRIES amounts to a bullish view on the silicon interposer outlook, highlighting continuously expanding demand for critical AI packaging components. The five-year agreement provides both parties with stable capacity and order expectations:

For GLOBALFOUNDRIES, it is a landmark order that brings its New York State capacity into the AI advanced packaging materials sector; for TSMC, it adds a long-term safeguard for silicon interposer supply on top of its own capacity expansion.

United Microelectronics and Powerchip: Expansion in Full Swing, Incremental Opportunities Face US Competition

United Microelectronics Corporation has invested in silicon interposers for some time and is actively expanding capacity, with monthly output set to double from 3,000 wafers to 6,000 wafers to meet customer demand for advanced packaging. Its technology covers silicon interposers, deep trench capacitors, wafer-level hybrid bonding, and active interposers. Among these, its 2.5D packaging solution incorporating deep trench capacitors has already shipped to major customers, and its active interposer is also undergoing validation with multiple customers.

Powerchip Semiconductor Manufacturing Corporation has made "3D AI wafer foundry" its transformation focus, extending its memory manufacturing and mature-node advantages into silicon interposers, silicon capacitors, and wafer stacking. This year it has showcased interposer, integrated passive component silicon capacitor, and 3D WoW DRAM stacking technologies. In terms of capacity allocation, it plans to leverage existing resources such as its P3 fab to expand its interposer footprint.

Both Taiwanese firms are simultaneously pursuing silicon interposer opportunities, betting on the continued expansion of AI packaging demand. However, TSMC's decision to lock in the $2 billion, five-year order with GLOBALFOUNDRIES means that US-based capacity will participate in supplying this segment over the next five years. For United Microelectronics and Powerchip, which are in the midst of capacity expansion, the competition for incremental silicon interposer orders will no longer be confined to Taiwanese manufacturers alone.

TSMC will hold its third-quarter earnings conference call on October 15, and further details on advanced packaging capacity planning and outsourcing strategy will become a focal point for the market.