Exclusive: Advanced packaging outpaces front-end growth while NPO paves way for commercial CPO

The insatiable demand from generative AI for compute density is shifting semiconductor innovation from transistor scaling to system-level integration. Advanced packaging has evolved from a fallback option into the primary vector for extending Moore’s Law, sharply boosting demand for high-density interconnects, thermal interface materials, and temporary bonding adhesives. Material suppliers like Merck are already positioning aggressively, yet export controls driven by geopolitical tensions are increasing compliance costs and supply chain fragility for OSATs in Taiwan, China and mainland China. As the industry transitions from NPO to commercial CPO, Intel, TSMC, and Coherent are likely to accelerate silicon photonics IP licensing or joint ventures to secure ecosystem dominance. Within 18 months, second-tier packaging firms lacking vertical integration will face severe margin erosion, while those controlling opto-electronic co-packaging test standards will anchor the next-gen AI chip supply chain.