The Taiwan government and major local semiconductor and electronics corporations, including TSMC, are moving to build a "silicon photonics" ecosystem, regarded as the next-generation data transmission technology for the age of artificial intelligence (AI).
According to Taiwan media including the Liberty Times on the 7th, the Ministry of Economic Affairs said that more than 30 leading local corporations, including TSMC, will push to establish a "Silicon Photonics Alliance." At Semicon Taiwan 2026, held in Taipei on the 2nd to 4th, silicon photonics was also a major topic.
Silicon photonics is a technology that uses light instead of conventional electrical signals to exchange data between semiconductor chips. As the computing performance of AI Semiconductor chips rapidly increases and the data that must be exchanged between chips surges, data movement speed and power consumption are emerging as new bottlenecks.
The Ministry of Economic Affairs explained that applying silicon photonics can reduce heat generated during data transmission and cut power consumption by 30–50%. As it becomes important not only how high AI computing performance is but also how quickly and efficiently vast amounts of data can be moved, the importance of related technologies is growing.
The alliance will focus especially on jointly solving the technical challenges of "co-packaged optics (CPO)." CPO is a technology that packages optical components right next to an AI Semiconductor so data can be sent and received with light. Put simply, instead of sending data generated by the chip far away as an electrical signal, it converts it into an optical signal close to the chip and transmits it immediately. While it can increase transmission speed and reduce power consumption, the technical difficulty is high because semiconductor and optical components must be stably integrated into a single package.
The Taiwan government plans to extend its advanced semiconductor manufacturing and packaging ecosystem centered on TSMC to silicon photonics to maintain leadership of the supply chain. The Ministry of Economic Affairs cited as a competitive edge that Taiwan holds more than a 90% share in advanced processes at 7 nanometers (nm, one-billionth of a meter) and below, and about a 50% share in the semiconductor packaging and testing market.
Global semiconductor companies are also accelerating investment in silicon photonics. Nvidia said in March that it would invest $4 billion (about 5.3 trillion won) in silicon photonics technology.
Government-level support in Taiwan is also expanding. President Lai Ching-te of Taiwan last year pushed the "AI New Top Ten Constructions," including silicon photonics, setting a goal of generating 15 trillion Taiwan dollars (about 695.4 trillion won) in production inducement effects and creating 500,000 AI-related jobs by 2040.
TSMC is also preparing to introduce next-generation advanced packaging technology. Citing sources, Taiwan media reported that TSMC plans to begin mass production of "chip on panel on substrate (CoPoS)" in the second half of 2028.
CoPoS goes a step beyond "chip on wafer on substrate (CoWoS)," currently used in AI Semiconductor packaging, by using a large rectangular panel instead of a round wafer. TSMC is reportedly pursuing a plan to replace the existing 12-inch round wafer with a rectangular panel measuring 310×310 mm, raising material utilization from below 70% to above 90%.
TSMC is said to be starting related equipment and material validation this year, conducting small-scale pilot production in 2027, and beginning full-scale mass production in the second half of 2028.