Aletheia Raises TSMC Price Target to NT$3,500 on AI Demand, Capacity Expansion

Demand for generative AI and high-performance computing is pushing chipmakers beyond the size limits of individual dies, increasing reliance on advanced packaging. TSMC’s CoWoS technology combines processors and high-bandwidth memory in a single package, making it central to AI accelerator production. Scaling those packages, however, raises system-level challenges including heterogeneous integration, material compatibility, warpage control and sufficient capacity across the supply chain.

TSMC said at the OCP APAC Summit that its 5.5-reticle-size CoWoS package has entered mass production, with yields holding above 98% and reaching as high as 99%. The company plans to scale the technology to 14 times reticle size by 2029 while addressing integration and materials constraints. TSMC also identified ABF substrates as a potential next bottleneck after memory, highlighting shifting supply pressures as AI packages grow larger and more complex.

Global cloud providers are stepping up investment in AI infrastructure, boosting demand for TSMC’s 3-nanometer and 2-nanometer processes and CoWoS advanced packaging for high-performance computing chips. With capacity falling short of demand, the scale of TSMC’s expansion directly affects shipments by customers including Nvidia and AMD and has become central to Citi’s and Goldman Sachs’ reassessments of the chipmaker’s earnings and share price.

Reports released on July 6, 2026, showed Citi raising its TSMC price target to NT$3,800 from NT$2,875, while Goldman Sachs lifted its target to NT$3,000 from NT$2,750. Both maintained buy ratings. Citi estimates capital expenditure of $75 billion in 2027 and $80 billion in 2028, while Goldman forecasts $78 billion and $82 billion, respectively.

TSMC’s advanced process technology and CoWoS advanced packaging have positioned it to capture demand from AI servers and custom chips developed by major technology companies. CoWoS is a key technology for integrating high-performance computing chips with high-bandwidth memory. The pace of its capacity expansion affects global AI chip supplies as well as order momentum for packaging, testing and equipment suppliers.

Mizuho Securities recently raised its forecasts substantially for TSMC’s CoWoS packaging and advanced process capacity in 2026 and 2027, reflecting continued growth in demand for AI servers and custom chips. The benefits of the expansion are expected to spill over to packaging and testing providers such as ASE Technology Holding and to semiconductor equipment makers. The available event data did not disclose exact capacity figures, financial amounts or the report’s publication date.