Amazon Device Losses and TSMC Packaging Prices Rise
Amazon device business losses grow as TSMC considers price hikes for essential advanced chip packaging.
Updated on Oct. 27, 2026 in Semiconductors
Live Poll
Do you expect the cost of new consumer electronics to rise in the coming months?
Amazon now forecasts a $4.612 billion gross loss for its devices business this year, far exceeding its initial $438 million target. Separately, TSMC is considering raising advanced packaging prices by 10% to 20% due to surging demand for AI hardware.
Why it matters
Rising memory costs are eroding margins in Amazon's hardware division, while capacity constraints at TSMC threaten to increase production costs for major chip designers like Nvidia and AMD.
TSMC monthly CoWoS (Chip on Wafer on Substrate) capacity is projected to exceed 130,000 units in 2026 and 200,000 units by 2027. This advanced packaging process is essential for integrating high-bandwidth memory with compute silicon.
The players
Amazon
A multinational technology conglomerate operating in cloud computing, e-commerce, and consumer hardware divisions.
TSMC
The world's largest contract semiconductor manufacturer specializing in advanced node fabrication and packaging.
Nvidia
A designer of graphics processing units and high-performance AI chips that relies heavily on TSMC's manufacturing services.
AMD
A semiconductor company that produces CPUs and GPUs and competes in the data center market.
The details
CoWoS — a technique that stacks memory and compute silicon on a common substrate — is becoming a bottleneck as demand migrates from GPUs to server CPUs and ASICs (Application-Specific Integrated Circuits). TSMC is struggling to scale this capacity fast enough to meet market demand. Meanwhile, Amazon is managing complex trade-offs between retail pricing, such as the $75 Frontier bracelet and $100 Eclipse device, and the rising cost of components like memory.
Timeline
October 15: Amazon unveiled the new Bee brand Frontier and Eclipse devices.
2026: TSMC monthly CoWoS capacity is expected to exceed 130,000 units.
2027: TSMC monthly CoWoS capacity is expected to exceed 200,000 units.
The Tech Race
The supply crunch highlights the growing competition for advanced packaging, which has become as vital as lithography in the semiconductor race. As demand for AI hardware outpaces current fabrication capabilities, TSMC is forced to reconsider its pricing structures to manage the load.
Rising hardware costs for companies like Amazon may eventually lead to price adjustments on consumer devices. Meanwhile, chip designers reliant on TSMC may pass increased manufacturing costs down to server and hardware buyers in the coming production cycles.
The takeaway
The semiconductor supply chain is facing a pivot point where packaging capacity is driving costs higher across the sector. Investors should monitor TSMC's upcoming quarterly guidance for confirmation on whether the 10% to 20% price hike for advanced packaging becomes formal policy.
Further reading
For broader trends in chip manufacturing and supply chain constraints, visit the Semiconductors section.
Source note: This article includes information reported by Firstpost.
Live Poll
Do you expect the cost of new consumer electronics to rise in the coming months?
