Mizuho lifts TSMC CoWoS capacity forecasts as server CPU demand surges

Investing.com -- Mizuho Securities Asia raised its forecast for TSMC's monthly CoWoS packaging capacity to 140,000 units by 2026 and 190,000–200,000 units by 2027, up from prior estimates of 120,000 and 170,000–180,000 respectively, as a sharply upgraded outlook for AI-driven server CPU demand forces a broad revision to the firm's semiconductor supply model.

Taiwan Semiconductor Manufacturing (TW:2330) trades on the Taiwan Stock Exchange under ticker 2330, and its U.S.-listed ADR (NYSE:TSM) is among the most closely watched proxies for AI infrastructure spending. The upward revision to packaging capacity forecasts signals that Mizuho now sees TSMC's manufacturing footprint as needing to expand faster than previously modeled to meet accelerating orders.

"We foresee stronger demand outlook for AI and server CPU in 2027, including Nvidia Vera CPU, Intel and AMD server CPU, and CSP players' server CPU (Google, AWS, Microsoft, and Meta)," said Mizuho analyst Kevin Wang. "This has prompted higher capacity requirement for advanced nodes and CoWoS."

The revision to CoWoS capacity runs in parallel with an aggressive upgrade to the firm's demand forecasts. Mizuho now projects 630,000 CoWoS units for NVIDIA Corporation (NASDAQ:NVDA) at TSMC in 2026, rising to 1,005,000 in 2027, with the increase attributed to higher demand for Nvidia's Vera CPU in 2026–27 and stronger production for the Rubin architecture in 2027. The Broadcom Inc (NASDAQ:AVGO) estimate for 2027 was trimmed slightly to 425,000 from 450,000, while the MediaTek figure was nearly doubled to 180,000 from 93,000, driven by stronger Google TPU demand.

On the advanced node side, Mizuho expects TSMC's N3 monthly capacity to reach 170,000 by 2026 and 200,000 by 2027. N2 capacity is projected at 90,000 by 2026, 150,000 by 2027, and 200,000 by 2028. Looking further out, the A14 node is expected to reach 15,000 units per month by 2027 and 40,000 by 2028, a timeline that underscores how the most advanced silicon generations will be in meaningful production well before the end of the decade.

The macro driver behind all of these revisions is a structural step-up in server CPU demand. Wang is explicit: "We believe server CPU demand for AI applications, including x86 and ARM-based, to grow above 50% YoY in 2027. ARM-based server CPU should be more than double in 2027, compared with 2026." Mizuho's unit-level forecasts flesh out that thesis in considerable detail. The firm projects Nvidia Vera CPU production at more than 7 million units in 2027, Advanced Micro Devices Inc (NASDAQ:AMD) Venice CPU at 5 million units, Google CPU at more than 4 million units, AWS CPU at more than 3 million units, Microsoft CPU at roughly 1 million units, and Meta CPU at 100,000–200,000 units.

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The capacity buildout extends beyond TSMC itself. Mizuho expects ASE's monthly CoWoS capacity to reach 20,000 by 2026 and 40,000–45,000 by 2027, primarily serving AMD Venice and Nvidia Vera CPU programs. Amkor's monthly CoWoS capacity is forecast to expand to 20,000–25,000 by end-2027, covering Nvidia Vera CPU, GB10, LPU, Broadcom switch, and GUC Microsoft CPU. Mizuho rates both ASE (BUY; price objective: TWD570) and ASMPT (BUY; price objective: HKD280) as beneficiaries of these packaging trends.

Equipment procurement is also accelerating. Wang noted that CoW thermal compression bonding orders for Shibaura were observed from ASE/SPIL in March and from TSMC in April, and Mizuho expects TSMC and ASE/SPIL combined to procure more than 130 units of TCB from Shibaura in 2026. TSMC is additionally planning to place 50–80 units of flux-less TCB orders with either K&S or ASMPT in the second half of 2026 and first half of 2027, a detail that points to continued equipment capex even as lead times tighten.

On the Intel front, Mizuho notes that the EMIB-T interconnect yield rate has reached more than 95%, with Intel now engaged in customer conversations with MediaTek, Ampere Computing, AWS, and Tesla for adoption of the technology.

Mizuho carries a BUY rating on TSMC with a price objective of TWD3,000, and rates ASML Holding NV (AS:ASML) BUY with a price objective of EUR2,000. The key forward catalysts for the thesis include whether Nvidia's Vera CPU ramp and Rubin production schedule stay on track into 2027, whether CSP silicon programs at Google and AWS accelerate further, and whether TSMC's N2 yield improvements sustain the capacity expansion timeline across 2027 and into 2028.

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