NVIDIA's CEO Jensen Huang confirms that no CoWoS packaging order cuts are being implemented, but the change in figures is simply due to the shift to Blackwell.
NVIDIA Isn't Slowing Down On CoWoS Orders At All, Rather The Newer "CoWoS-L" Comes With Relatively Lesser Yield Rates
Well, the industry has been pretty concerned about TSMC's CoWoS performance in the markets, given that it was rumored that the firm had seen an order cut down from NVIDIA, citing low demand from the AI market. Not only did this rumor lead to a correction in NVIDIA's share pricing, but a negative sentiment started to brew in the Taiwanese markets. However, Jensen Huang has clarified the CoWoS situation (via The AI Investor), disclosing that Blackwell utilizes CoWoS-L, which means that the industry is now transitioning to newer production lines, hence the output numbers have dropped.
Jensen Huang on CoWoS capacity cut rumor. $NVDA pic.twitter.com/58EYBUX7wX
— The AI Investor (@The_AI_Investor) March 3, 2025
For those still confused with the Hopper generation, NVIDIA utilized CoWoS-S technology, which is said to be much more mature, offering yield rates of up to 99%. However, with Blackwell, Team Green switched to the enhanced CoWoS-L, and while this packaging technology did offer an impressive performance boost, the supply chain still hasn't been able to achieve optimal yield rates with it, which means that the production levels ultimately will be lower than CoWoS-S; however, NVIDIA is working with partners to speed up the process, as reiterated by Jensen.
In a report by Taiwan Economic Daily, it is reported that TSMC is working to expand CoWoS-L production since the packaging technology is in tremendous demand. The Taiwan giant is expected to entirely switch to the newer standard by H2 2025, given that the upcoming Blackwell Ultra GB300 lineup will also feature CoWoS-L, making it the right time to do so. However, since Hopper is reaching the EOL cycle right now, and NVIDIA basically peaked the demand for the architecture in the past, CoWoS production figures will drop, but this will likely be transitory.
While CoWoS output numbers certainly don't depict the entire demand coming from the AI markets, they do show that NVIDIA will have to do a lot to reach the same hype it had with the Hopper generation. Given Blackwell's rather sloppy performance, we expect the "Ultra" lineup to put up a better show.
