Morgan Stanley elaborates on TSMC's CoWoS capacity battle: NVIDIA secures 60%, cloud AI chip market expected to surge 40%-50% by 2026
Taiwan Semiconductor's advanced packaging CoWoS has become a battleground in the AI competition. Morgan Stanley predicts that global demand for CoWoS wafers will reach 1 million pieces by 2026, with NVIDIA alone accounting for 595,000 pieces, while leading players like AMD, Broadcom, and Amazon fiercely compete for the remaining capacity. Taiwan Semiconductor is accelerating the expansion of CoWoS capacity, expecting to reach a monthly capacity of 93,000 pieces by the end of next year, with the AI business projected to contribute 25% of its total revenue this year
The arms race in artificial intelligence is extending from chip design to backend packaging, and a battle for TSMC's CoWoS capacity has already begun.
TSMC's advanced packaging technology (CoWoS) has become a strategic stronghold for major players competing in AI. According to news from the Wind Trading Platform, Morgan Stanley's latest research report provides a detailed forecast of TSMC and its partners' CoWoS capacity allocation for 2026. The data shows that chip giant NVIDIA is expected to secure 60% of the global CoWoS total demand in 2026, further consolidating its market dominance.
The report predicts that global demand for CoWoS will reach 1 million wafers by 2026, indicating a robust growth of 40% to 50% in the cloud AI semiconductor market. NVIDIA is expected to consume 595,000 wafers, followed closely by other tech giants such as AMD, Broadcom, and Amazon, who are also actively booking capacity to ensure critical support for the next generation of AI products.
Behind this competition is the rising capital expenditure of cloud service providers (CSPs). For example, Google has raised its capital expenditure budget for 2025 from $75 billion to $85 billion and expects to accelerate investments further in 2026. This lays a solid foundation for the continued prosperity of the entire AI semiconductor supply chain.
NVIDIA Takes the Lead, Securing 60% of CoWoS Capacity
NVIDIA holds an absolute leading position in the CoWoS capacity competition. The report predicts that by 2026, NVIDIA's total demand for CoWoS wafers will reach 595,000, accounting for 60% of global total demand.
Of this massive order, approximately 510,000 wafers will be handled by TSMC, primarily for the CoWoS-L technology required for its next-generation Rubin architecture chips. Based on this, NVIDIA's chip shipments in 2026 could reach 5.4 million units, with 2.4 million units coming from the Rubin platform. Outsourced assembly and test (OSAT) companies such as Amkor and ASE/SPIL will also share about 80,000 wafers of CoWoS capacity for NVIDIA, mainly for its Vera CPU and automotive chips.
Following NVIDIA, the pace of the challengers is also rapid. The report shows that AMD is expected to secure 105,000 CoWoS wafers, capturing about 11% of the market share. Of these, 80,000 wafers will be produced by TSMC for its MI355 and MI400 series AI accelerators. Broadcom, serving cloud service giants, has become another major player, with a total CoWoS demand of about 150,000 wafers in 2026, accounting for 15% of the share. Most of this capacity (145,000 wafers) is booked with TSMC, primarily for contract manufacturing for Google's TPU, Meta's custom chips, and OpenAI's projects.
- NVIDIA: It is predicted that by 2026, NVIDIA will book a total of 595,000 CoWoS wafers, accounting for about 60% of global total demand. Of these, 515,000 wafers will come from TSMC (with 510,000 being CoWoS-L), and another 80,000 from non-TSMC suppliers such as Amkor. This capacity will mainly be used for its Rubin, Vera CPU, GB10, and automotive chips
- Broadcom: Following closely, it is expected to obtain 150,000 CoWoS wafers, accounting for 15% of total demand. Its capacity mainly serves customized chips (ASIC) for large clients, including 90,000 wafers reserved for Google TPU (85,000 from TSMC, 5,000 from ASE/Siliconware), 50,000 wafers for Meta, and 10,000 wafers for OpenAI.
- AMD: It is expected to obtain 105,000 CoWoS wafers, accounting for 11% of total demand. Among them, 80,000 wafers come from TSMC, mainly for the MI355 and MI400 series chips; another 25,000 wafers come from ASE/Siliconware, used for its Venice CPU adopting CoWoS-L technology.
- Other major players: Amazon (AWS) has reserved 50,000 wafers through its partner Alchip; Marvell has reserved 55,000 wafers for customized chips for AWS and Microsoft; MediaTek has reserved 20,000 wafers for the Google TPU project.
The fierce competition for CoWoS capacity directly stems from the explosive growth of AI applications. The report predicts that global CoWoS total demand will increase from 370,000 wafers in 2024 to 670,000 wafers in 2025, and reach 1 million wafers in 2026, indicating that the cloud AI semiconductor market will see a year-on-year growth of 40%-50% in 2026.
Strong Demand Signals, Capital Expenditure Indicates High Market Growth
Behind this capacity race is the real demand brought by the implementation of AI applications. Morgan Stanley emphasizes that the dynamics of leading cloud service providers like Google are key indicators. According to the report analysis, Google has raised its capital expenditure budget for 2025 from $75 billion to $85 billion and expects to accelerate investment further in 2026.
More direct data shows that the number of tokens processed monthly by Google Cloud Platform has surged from 480 trillion in May this year to 980 trillion, achieving a doubling growth. Based on these strong signals, Morgan Stanley has raised its year-on-year growth forecast for capital expenditures of global top cloud service providers in 2025 from 39% to 43%.
The report predicts that driven by strong demand, global CoWoS total demand will grow by 81% in 2025 and continue to grow by 49% in 2026, providing sustained growth momentum for the entire AI semiconductor supply chain.
Capacity Expansion Accelerates, TSMC Becomes the Biggest Winner
In response to strong customer demand, TSMC, as the global leader in advanced packaging technology, is fully expanding The report predicts that by the end of 2026, TSMC's CoWoS monthly production capacity will be significantly increased from 32,000 wafers in 2024 to 93,000 wafers. The supply-demand imbalance in capacity has also brought substantial financial returns to TSMC. It is estimated that AI-related revenue will account for 25% of TSMC's total revenue in 2025, making it one of the most certain beneficiaries in this wave of AI.
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