Mizuho Securities has raised its forecast for TSMC's monthly CoWoS packaging capacity to 140,000 wafers in 2026 and 190,000–200,000 wafers in 2027, up from its previous forecasts of 120,000 wafers and 170,000–180,000 wafers, respectively. Behind this significant upward revision is a markedly improved outlook for AI-driven server CPU demand, which has prompted the firm to comprehensively revise its overall semiconductor supply model. The higher CoWoS capacity forecast indicates that Mizuho believes TSMC will need to expand its manufacturing scale faster than previously expected to meet continuously accelerating order demand.

Mizuho stated that the demand outlook for AI and server CPUs is expected to strengthen further in 2027, covering NVIDIA's Vera CPU, server CPUs from Intel and AMD, as well as in-house server CPUs developed by cloud service providers including Google, AWS, Microsoft, and Meta. This is driving higher demand for advanced process nodes and CoWoS packaging capacity.

At the same time, Mizuho has significantly raised its demand forecasts. The firm expects NVIDIA's CoWoS packaging demand at TSMC to reach 630,000 wafers in 2026, rising further to 1.005 million wafers in 2027. The growth is expected to be driven by stronger demand for NVIDIA's Vera CPU in 2026–2027 and increased production of Rubin architecture products in 2027. Broadcom's 2027 forecast has been slightly lowered from 450,000 wafers to 425,000 wafers, while MediaTek's forecast has been raised sharply from 93,000 wafers to nearly 180,000 wafers, supported by strong demand for Google's TPU.

Regarding advanced process nodes, Mizuho forecasts that TSMC's monthly N3 process capacity will reach 170,000 wafers in 2026 and 200,000 wafers in 2027. Monthly N2 process capacity is expected to reach 90,000 wafers in 2026, 150,000 wafers in 2027, and further increase to 200,000 wafers in 2028. Looking further ahead, monthly A14 process capacity is projected to reach 15,000 wafers in 2027 and 40,000 wafers in 2028, indicating that the most advanced chip process technology is expected to achieve meaningful volume production before the end of this decade.

The macro driver behind all of these revisions is the structural surge in server CPU demand. Demand for AI-focused server CPUs is expected to grow by more than 50% year over year in 2027, while the scale of ARM-based server CPUs in 2027 is projected to more than double compared with 2026. Mizuho also provided detailed shipment forecasts, expecting production of more than 7 million NVIDIA Vera CPUs in 2027, 5 million AMD Venice CPUs, more than 4 million Google CPUs, more than 3 million AWS CPUs, around 1 million Microsoft CPUs, and between 100,000 and 200,000 Meta CPUs.

Market Insight:

Mizuho maintains its Buy rating on TSMC. Key forward-looking catalysts for this investment theme include the production ramp-up of NVIDIA's Vera CPU and whether production of the Rubin architecture remains on schedule through 2027; whether in-house chip projects by cloud service providers such as Google and AWS continue to accelerate; and whether continued improvements in TSMC's N2 process yield can support its capacity expansion timeline for 2027–2028.