TSMC CoWoS Capacity Forecast Raised as Mizuho Sees AI Server CPU Demand Surging Through 2027

Mizuho Securities Asia has increased its forecast for Taiwan Semiconductor Manufacturing Co.'s (TSMC) advanced CoWoS packaging capacity, citing a much stronger outlook for artificial intelligence (AI) server processors and growing demand from major cloud providers and chipmakers.

The brokerage now expects TSMC's monthly CoWoS capacity to reach 140,000 units in 2026, up from its previous estimate of 120,000 units. For 2027, Mizuho forecasts capacity of 190,000 to 200,000 units, compared with its earlier projection of 170,000 to 180,000 units. The revised outlook reflects rising demand for AI infrastructure, prompting the firm to upgrade its semiconductor supply chain forecasts.

TSMC, listed on the Taiwan Stock Exchange under ticker 2330 and traded in the U.S. as ADRs under NYSE: TSM, remains one of the leading beneficiaries of the AI boom due to its dominant role in advanced chip manufacturing and packaging.

According to Mizuho analyst Kevin Wang, demand for AI and server CPUs is expected to strengthen significantly by 2027. The growth is expected to be driven by Nvidia's Vera CPU, Intel and AMD server processors, as well as custom chips developed by major cloud service providers including Google, Amazon Web Services (AWS), Microsoft, and Meta. The stronger demand outlook requires additional advanced-node wafer capacity and greater CoWoS packaging output.

Mizuho also significantly increased its projections for Nvidia's CoWoS demand at TSMC, forecasting 630,000 units in 2026 and approximately 1.01 million units in 2027. The increase reflects stronger expectations for Nvidia's Vera CPU production and the company's Rubin GPU architecture.

While Broadcom's projected 2027 CoWoS demand was slightly reduced to 425,000 units from 450,000, MediaTek's forecast nearly doubled to 180,000 units from 93,000, largely due to stronger demand for Google's TPU AI accelerators.

Beyond packaging, Mizuho also raised expectations for TSMC's advanced manufacturing nodes. The firm projects monthly N3 production capacity to reach 170,000 wafers in 2026 and 200,000 in 2027. N2 capacity is forecast at 90,000 wafers in 2026, increasing to 150,000 in 2027 and 200,000 in 2028. Looking further ahead, the next-generation A14 process is expected to reach monthly production of 15,000 units in 2027 before expanding to 40,000 units in 2028.

The brokerage believes AI-related server CPU shipments will grow by more than 50% year over year in 2027, with ARM-based server processors expected to more than double compared with 2026. Mizuho estimates Nvidia will produce over 7 million Vera CPUs in 2027, while AMD's Venice server CPU could reach 5 million units. Google's in-house processors are projected to exceed 4 million units, AWS chips more than 3 million units, Microsoft's custom CPUs around 1 million units, and Meta's processors between 100,000 and 200,000 units.

The expansion is expected to benefit advanced semiconductor packaging companies as well. Mizuho forecasts ASE's monthly CoWoS capacity to rise to 20,000 units in 2026 and 40,000 to 45,000 units by 2027, primarily supporting AMD Venice and Nvidia Vera CPU programs. Amkor is expected to expand monthly CoWoS capacity to between 20,000 and 25,000 units by the end of 2027, supporting products including Nvidia Vera CPU, GB10, Broadcom networking chips, and Microsoft's custom processors. The firm maintains Buy ratings on ASE and ASMPT.

Equipment investment is also expected to accelerate. Mizuho noted that thermal compression bonding (TCB) equipment orders from Shibaura were placed by ASE/SPIL in March and TSMC in April. The brokerage expects TSMC and ASE/SPIL to purchase more than 130 TCB systems from Shibaura in 2026. TSMC is also expected to order an additional 50 to 80 flux-less TCB systems from Kulicke & Soffa or ASMPT during the second half of 2026 and the first half of 2027.

Meanwhile, Intel continues to improve its advanced packaging technology. Mizuho said Intel's EMIB-T interconnect technology has achieved yield rates above 95%, with the company currently discussing adoption with customers including MediaTek, Ampere Computing, AWS, and Tesla.

Mizuho maintains a Buy rating on TSMC with a price target of TWD3,000 and also rates ASML as Buy with a EUR2,000 price objective. The brokerage believes key catalysts include the successful rollout of Nvidia's Vera CPU and Rubin architecture, expanding AI chip programs from hyperscale cloud providers, and continued improvements in TSMC's N2 manufacturing yields that support its long-term capacity expansion plans.