Xmas is a low-key affair in Taiwan. You have to wait until the Lunar New Year hits before the firecrackers go off, though the Taipei 101 firework display marking the start of the 2024 should also be worth staying up for even if the theme is the rather prosaic “Colorful World.”
I took advantage of the quiet time to put together a few thoughts about the prospects of Taiwan’s technology industry in 2024. The brightest spot will no doubt remain the high-end semiconductor manufacturing space, otherwise known as TSMC.
With demand for high-performance GPUs from Nvidia and AMD far outstripping supply, the TSMC’s biggest challenge is overcoming serious capacity constraints for its most advanced silicon wafer and CoWoS (Chip-on-Wafer-on-Substrate) packaging manufacturing processes. This is not an issue that will be resolved any time soon given the cost and complexity involved.
Despite regular rumors that big customers like Nvidia and Apple are looking to diversify their manufacturing base, that is unlikely to happen in the near future because of the huge technical and financial investments required to switch to a different manufacturing process. TSMC’s advanced CoWoS packaging for high-performance applications is another key reason why foundry competitors like Samsung will find it difficult to act as a second source for the industry’s leading players.
The huge demand for high-performance data center AI servers among cloud service providers and enterprise customers will also continue to benefit leading Taiwan PC manufacturers such as Asus, Quanta, and Gigabyte in 2024. Like Nvidia and AMD, their growth prospects in this high-margin segment are limited by capacity constraints at TSMC.
While prospects for the data center AI server market look very positive for the Taiwan technology industry in 2024 despite the current chip shortages, the picture for the mainstream PC market is a lot murkier. More on that in the second article in this series.
Gadgets, gizmos, software and devices. I love all technology.
