NVIDIA rumored to switch to Intel for advanced packaging for next-gen AI GPUs, away from TSMC

NVIDIA can't make enough of its AI GPUs to meet current demand, let alone the non-stop demand for AI computing power... with the company reportedly working with Intel using its advanced packaging services.

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The news is coming from UDN, which reports that TSMC's (Taiwan Semiconductor Manufacturing Company) and its CoWoS advanced packaging production capacity is "insufficient" which has left NVIDIA turning to Intel. Intel will use its advanced packaging production for NVIDIA, providing them with around 5000 pieces per month.

Intel's help here for NVIDIA will allow the AI GPU giant to pump out, even more, AI GPUs, which have been strained in supply because of various factors, mostly in the advanced packaging supply chain. Once Intel begins advanced packaging production for NVIDIA, it's expected that NVIDIA's total advanced packaging production capacity will increase by a significant 10%.

TSMC still remains as the clear main advanced packaging supplier for NVIDIA, with the Taiwan giant "sprinting" to expand its advanced packaging production capacity. Monthly production capacity in Q1 2024 is expected to rise up to 50,000 pieces per month, up from 40,000 per month in December 2023, representing a chunky 25% increase in production capacity.

• Read more: NVIDIA commands 90% of AI GPU market, competitors 'years from catching up'
• Read more: NVIDIA AI GPU shipments expected to surge 150% year-over-year in 2024

Intel will be using its Oregon and New Mexico facilities in the US for advanced packaging production, while Team Blue is "actively expanding" its advanced packaging at its new factory in Penang. CDN points out that Intel has previously said it has open arms for customers to only use its advanced packaging solutions, with its end goal of giving customers -- like NVIDIA in this case -- more production flexibility.

AI GPU chip shortages were previously because of three different factors: not only insufficient advanced packaging production capacity but also low volumes of new HBM3 memory production capacity, and some cloud service providers placed multiple orders. These factors have slowly been eliminated, and now production capacity can increase for NVIDIA.