TSMC accelerates CPO deployment upgrade; ABF substrate supply and demand may face renewed tension.

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The demand for high-speed transmission in AI data centers continues to surge, pushing competition in the semiconductor supply chain onto a new battlefield.

According to Taiwan's "Industrial and Commercial Times" on Monday, TSMC recently revealed that its "COUPE on Substrate" solution, which integrates the Compact Universal Photonic Engine (COUPE), is expected to enter mass production in the second half of 2026.

The industry interprets this as a key signal that AI chip manufacturing is moving from "advanced process + advanced packaging" towards a new phase of "co-packaged optics + system integration", with the focus of competition further extending into the ABF substrate and co-packaged optics integration field.

As Nvidia’s new-generation Vera Rubin platform continues to improve the integration of AI GPUs, HBM, and high-speed network connections, Nvidia’s next targeted supply chain bottleneck is very likely to be the ABF substrate—using methods such as framework agreements, prepayments, strategic cooperation, or even equity investment, to avoid a repeat of previous supply shortages with CoWoS and HBM. The market expects that as demand for AI GPUs, ASICs, and CPO rises together, high-end ABF substrates may once again face a supply shortage next year.

TSMC CPO Extends to Substrate Level, Technology Path Upgrades

TSMC’s extension of the COUPE solution to the substrate level marks an important evolution in AI chip packaging technology. The supply chain points out that as optical components get closer to computing chips, data transmission distance becomes shorter, and signal loss, latency, and power consumption can be synchronously reduced, which is critical for AI servers transitioning from single-machine performance competition to full-rack and cluster efficiency competition.

Nvidia has also recently announced deepening its cooperation with Corning to expand its supply layout of optical components for AI data centers, ensuring future high-speed optical interconnect capacity. Analysts believe these moves are pointing in the same direction: as cloud service providers (CSPs) continue to pursue higher rack efficiency and lower power consumption, key points such as wafer foundries, HBM, fiber optics, optical modules, and ABF substrates may all become core strategic resources for AI giants to secure capacity in advance.

ABF Substrate Demand Structurally Rises, Consumption Several Times Higher Than Traditional CPUs

The supply chain reveals that compared to traditional CPU substrates, AI GPUs and ASICs require significantly larger substrate areas and more layers, with ABF material consumption increasing 5 to 10 times. As demand for AI GPUs, ASICs, and high-end networking chips continues to climb, the supply-demand structure for high-end ABF substrates is expected to remain tight for the long term.

Media analysis suggests Nvidia may secure high-end substrate capacity in advance through long-term contracts, prepayments, or even strategic cooperation, to mitigate supply chain risks. This expectation is consistent with Nvidia’s previous strategies to lock in capacity for CoWoS packaging and HBM memory.

Companies like Shing Shing, Unimicron, and Nan Ya PCB, which make high-end ABF substrates, are expected to benefit from these demand trends. Among them, Shing Shing, which has entered the Nvidia Vera Rubin platform supply chain, stands out. Industry expects that, as CPO gradually becomes the mainstream architecture for future AI servers, the strategic importance of high-end ABF substrates will continue to rise, and the capacity and technical layout of related manufacturers may become important bargaining chips in supply chain negotiations.

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