#Taiwan #Taipei #Advanced Packaging #AI Chips #DIGITIMES

Advanced Packaging: Revolutionizing AI Chip Performance

As technology continues to advance, the demand for enhanced performance in AI chips has reached critical levels. According to Tony Huang, chief semiconductor analyst at DIGITIMES, advanced packaging has surfaced as a pivotal player in this landscape. Traditionally, Moore’s Law has governed the evolution of semiconductors by focusing on transistor scaling. However, as this trend begins to plateau, advanced packaging is gaining traction as a crucial enabler for performance breakthroughs in AI chip design.

The Shift from Transistor Scaling to Heterogeneous Integration

Huang highlights that heterogeneous integration has become as essential to system performance as the transistor scaling that characterized previous generations of semiconductors. This shift is illustrated by the immense potential for increased compute density. For instance, moving from a 28nm to an A16 chip without advanced packaging would yield approximately an 80-fold increase in compute density per reticle area. However, when advanced packaging techniques are applied, this gain escalates to an astounding 320 times.

Navigating Bottlenecks in AI Workloads

The rise of AI workloads has unveiled several technical bottlenecks that could hinder performance. Huang identifies these critical barriers, which include:

• - Memory Wall: Addressed through high-bandwidth memory (HBM), which enhances data retrieval speeds.
• - I/O and Communication Walls: Tackled by reducing latency using chiplet and interposer technologies.
• - Power and Thermal Walls: Mitigated through improved power efficiency and thermal management techniques.
• - Yield and Fabrication Walls: Eased by adopting smaller chiplets that lead to better yield rates.

The deployment of advanced technologies like 3D System on Chip (SoC) stacking, hybrid bonding, and co-packaged optics (CPO) has become essential in overcoming these challenges, marking a revolutionary change in the semiconductor industry.

A Market Poised for Explosive Growth

According to Huang, the advanced packaging segment for AI data center chips is expected to experience a staggering compound annual growth rate (CAGR) of 45.5% between 2024 and 2030. This growth rate dramatically surpasses the overall semiconductor industry's growth of 8.7% and the broader packaging and testing sector's 9.5%. In the competitive landscape, 2.5D CoWoS-type solutions continue to dominate market shares but are anticipated to gradually decrease from 69% to 58% in favor of more advanced 3D and hybrid approaches.

Huang draws attention to recent innovations such as AMD's MI300X AI accelerator, which uniquely combines 3D SoIC and 2.5D CoWoS. Similarly, Broadcom is developing a 3.5D accelerator that employs a face-to-face structure, illustrating the industry's technological evolution.

Taiwan’s Dominant Market Position

Taiwan plays a crucial role in the global landscape of AI packaging, commanding approximately 77% of the data center AI packaging market as of 2024. Despite escalating competition from giants like Intel and Samsung, Taiwan’s share is forecasted to remain strong, stabilizing around 70% by 2030. Excluding HBM assembly—which predominantly occurs in South Korea—Taiwan achieves a remarkable 90% market share for AI packaging, particularly noteworthy when considering the rapid advancements occurring in the region.

Classifying AI Chips for Future Success

In Huang's analysis, data center AI chips fall into three main categories:

• - AI Server CPUs
• - AI Accelerators: This encompasses GPUs from NVIDIA and AMD, as well as specialized chips like Google's TPU.
• - AI Networking Chips: These include switch ICs from Broadcom and distributed processing units (DPUs) from NVIDIA.

CPO falls within the AI networking segment and is also classified as part of advanced packaging innovations. Huang elaborates that TSMC's hybrid bonding approach—merging electrical and photonic ICs—plays a significant role in the evolution of AI chip performance.

China's Landscape and Self-sufficiency Aspirations

While Taiwan leads the market, China is ambitiously pursuing self-sufficiency in data center AI chips aiming for over 70% in domestic production. Key players include SMIC in foundry operations and CXMT, producing HBM2E memory. Huang predicts that by 2030, Chinese AI chips could constitute more than 15% of global shipments. However, their revenue share may only reach 10%–12% due to lingering technology gaps. Notably, China is adopting large-scale clustering and optical interconnect solutions to close these divides.

The Enduring Importance of Advanced Packaging

In conclusion, advanced packaging is not merely an engineering trend; it's a transformative force in the AI-driven era. Its projected 45.5% CAGR underscores its importance in redefining semiconductor capabilities. As Huang aptly puts it, while transistor scaling represents the vertical climb of Moore's Law, advanced packaging allows for horizontal expansion, effectively enabling AI chips to push beyond traditional physical limits. This evolution is crucial for meeting the needs of a data-driven future.

Tony Huang will share more insights into these advancements in a forthcoming keynote speech during a DIGITIMES webinar on advanced packaging on December 5, 2025.