Chipmaker Nvidia (NVDA) says that its demand for high-tech chip packaging from Taiwan Semiconductor Manufacturing Co. (TSM) is still strong, but the type of packaging it needs is changing, according to Reuters. CEO Jensen Huang explained that Nvidia is moving to a newer technology called CoWoS-L for its latest AI chip, Blackwell. CoWoS (chip-on-wafer-on-substrate) is a special way of combining multiple smaller chips into a single unit, which makes them faster and more powerful.
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Nvidia’s older Hopper chips used an earlier version of this technology, called CoWoS-S, but now the focus is shifting. Huang clarified that this isn’t about cutting orders but increasing production with the new technology. Nvidia has been selling its Blackwell chips as quickly as TSMC can make them, but the process of packaging these chips remains a bottleneck due to limited capacity. Huang mentioned that the newer CoWoS-L technology allows for even more efficient production, which will help Nvidia scale up to meet growing demand.
Reports of Nvidia reducing orders for the older CoWoS-S packaging have raised concerns about TSMC’s revenue, but Huang reassured that this transition is about upgrading, not scaling back. Even with production challenges, Nvidia has expanded its packaging capacity four times in the last two years. However, Huang avoided commenting on recent U.S. export restrictions that limit where Nvidia can sell its AI chips.
Is NVDA a Good Stock to Buy?
Turning to Wall Street, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 36 Buys and three Holds assigned in the past three months. After a 141% rally in its share price over the past year, the average NVDA price target of $176.44 per share implies an upside potential of 30.5% from current levels.
