ASICs and CPUs move to center stage, driving the next wave of CoWoS expansion

Following UBS Taiwan Summit (Day 1, Day 2&3) and our CoWoS industry analysis, we are further raising CoWoS industry capacity to 270kwpm from 260kwpm end-2027E, up from 160kwpm end-2026E. Current visibility suggests requirement for further CoWoS capacity expansion in 2028, even with Intel's EMIB-T and TSMC's CoPoS ramping for large package AI accelerator in 2028-29. We believe the trend reflects more robust Cloud AI chip demand, especially from CPUs and ASICs, which we think should mostly stay at CoWoS in 2028-29. The migration toward larger package with heterogenous integration also consumes a lot more capacity. Meanwhile, CoWoS supply continues to diversify, thanks to improving capabilities of OSATs and larger capacity requirement. For CoW, we view ASE's expansion to be more aggressive to reach 70kwpm capacity end of 2027E from 20kwpm end of 2026E, vs TSMC / Amkor's CoW capacity at 180kwpm / 20kwpm end of 2027E. After several years of investment, the large hyperscalers and AI natives