Why every major supplier says demand will outstrip capacity — no matter how much they spend.
The Q3 2025 earnings season brought unusual alignment across the semiconductor ecosystem. CEOs from TSMC, SK Hynix, Micron, Intel, NVIDIA, and Samsung all delivered the same message: demand for advanced nodes, advanced packaging, and high-bandwidth memory (HBM) is rising much faster than capacity can be built.
This is the clearest signal yet that AI’s supply chain bottlenecks are not short-term “tightness.” They are structural limits that will shape pricing, lead times, and availability well into 2027.
If one technology defines the current constraint, it is CoWoS (Chip-on-Wafer-on-Substrate), the advanced packaging process underpinning nearly all high-end AI accelerators. TSMC executives were unusually direct:
CoWoS is the key enabler for GPUs and AI accelerators, including NVIDIA Blackwell and AMD MI355 chips. Without this packaging step, even 3nm wafers cannot become functional AI chips.
NVIDIA confirmed the same pressure point:
Despite expansions from TSMC and OSATs, advanced packaging capacity remains the most constraining part of the AI semiconductor supply chain.
2. HBM Is Sold Out Through 2026 (HBM3E Included)
HBM, especially HBM3 and HBM3E, remains the single tightest component in the AI stack.
Samsung reinforced the pricing impact:
Three structural realities are now clear:
This isn’t a short-term squeeze. HBM is becoming the defining constraint for the AI market.
Advanced logic capacity, particularly TSMC 3nm and early 2nm ramp, is now experiencing the same pressure.
In the most recent update reported by Tom’s Hardware, TSMC stated that:
This aligns directly with commentary from major chipmakers:
Advanced-node scarcity is no longer speculative. It is already reshaping wafer allocation for 2026–2027, with ripple effects across GPUs, networking ASICs, and high-performance compute.
Across HBM, advanced packaging, and 3nm wafers, supplier commentary converges on one reality:
Demand is not slowing, supply is the ceiling.
TSMC, SK Hynix, Micron, Samsung, NVIDIA, and Intel all reported:
In past cycles, shortages were cyclical. In the AI cycle, shortages are architectural.
As C.C. Wei emphasized: “The structural AI-related demand continues to be very strong.”
The next two years of AI hardware growth will be shaped by CoWoS bottlenecks, HBM3E scarcity, and 3nm/2nm wafer constraints. Every major supplier is signaling deep, structural tightness, not temporary volatility — across the most critical enablers of AI infrastructure.
Procurement teams that plan for these constraints today will be the ones prepared for the supply environment of 2026–2027.
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CoWoS (Chip-on-Wafer-on-Substrate) is the critical packaging process that enables HBM to sit next to GPUs and AI accelerators. Even if wafer supply increases, chips cannot be assembled without CoWoS capacity. TSMC, NVIDIA, and multiple OSATs reported that CoWoS is oversubscribed through at least 2026, making it the single tightest part of the AI semiconductor stack.
Based on Q3 earnings calls from SK Hynix, Micron, and Samsung, HBM supply is fully allocated through 2026, including HBM3E. Both demand growth and manufacturing complexity limit how quickly suppliers can expand output. Early signals suggest tightness could extend into 2027, especially as hyperscalers and GPU vendors secure long-term contracts.
AI infrastructure requires higher memory bandwidth and lower latency than traditional DRAM can provide. New architectures such as NVIDIA Blackwell and AMD MI355 depend on HBM3E stacking. As AI workloads continue to scale, HBM becomes the performance limiter — and thus the hardest-to-source component.
TSMC reported that advanced-node wafer demand is “about three times” greater than its available supply, driven by AI accelerators, networking ASICs, and power-efficient CPUs. Even with record capex, ramping new nodes takes years, not quarters. As a result, 3nm and early 2nm availability remains structurally constrained.
Suppliers have already signaled upward pricing pressure. Samsung expects high-teens to low-20% price increases for HBM in 2026 contracts. Limited CoWoS slots and oversubscribed wafer starts will also support elevated pricing for advanced-node logic and next-generation accelerators.
AI is absorbing most of the incremental supply for HBM, CoWoS, and 3nm wafers — but the ripple effects extend much further. Suppliers warn of broader DRAM tightness, longer lead times for networking ASICs, and reduced availability for high-performance CPUs used in telecom, cloud, and storage systems.
Not for AI training or high-end inference. HBM’s bandwidth and power efficiency are essential for accelerator performance, meaning GDDR6 and DDR5 cannot replace HBM for these workloads. In some mid-tier applications, however, customers may shift to GDDR-based designs as a stopgap.
Not in the near term. Even with aggressive investment from TSMC, Samsung, Micron, and OSATs, meaningful CoWoS and HBM expansion will take 12–24 months. Rumored long-term moves — such as Broadcom evaluating its own fab strategy — would not impact supply until 2027 or later.
Teams are prioritizing:
Being proactive is essential; suppliers universally confirmed demand far exceeds near-term capacity.
Most suppliers expect tight conditions through 2026, with some signals pointing into 2027. Because the demand is structural—not cyclical—capacity expansion is unlikely to outpace AI adoption over the next two years.