TSMC Faces High Demand Amid AI Chip Shortages as NVIDIA, Apple, and AMD Compete

Taiwan Semiconductor Manufacturing remains central to the global AI boom as major technology companies compete for limited chipmaking and advanced-packaging capacity. The chipmaker is expanding production to meet long-term demand. However, supply constraints remain a growing concern for customers building AI infrastructure. Mizuho Securities Managing Director Jordan Klein said on Thursday that competition is particularly fierce among Broadcom, NVIDIA, Apple and Advanced Micro Devices (AMD).

Taiwan Semiconductor reported third-quarter revenue of $46.7 billion, up 16.2% sequentially and above the high end of guidance. Gross margin fell 1.3 percentage points sequentially to 66.4%, partly reflecting the initial production ramp of 2-nanometer technology. High-performance computing revenue jumped 22% sequentially and accounted for 68% of total sales. Chips manufactured using 7-nanometer and more advanced processes represented 79% of wafer revenue.

Taiwan Semiconductor North America President Sajiv Dalal said Dalal receives at least 10 calls daily from customers seeking wafer capacity. Klein said Taiwan Semiconductor could increase capacity by 10% to 20% beyond earlier targets, potentially reaching 120,000 wafers per month by year-end. Klein expects NVIDIA and Apple to secure a significant share of the additional supply. CNBC reported that Taiwan Semiconductor's 10 largest customers accounted for 78% of the chipmaker's 2025 net revenue.

Limited manufacturing capacity could complicate the technology industry's aggressive AI investment plans. Klein warned that advanced logic chip shortages could threaten ambitious revenue projections for frontier AI models and large-scale infrastructure projects. Vlad Galabov, co-host of The AIDC Debate, said advanced logic chip shortages differ from memory constraints because processors require customized designs and long-term production planning. Consequently, even major customers such as NVIDIA, AMD and Apple face supply risks.

Advanced packaging has emerged as another major constraint beyond wafer production. Galabov said NVIDIA has already reserved most of Taiwan Semiconductor's advanced chip-on-wafer-on-substrate (CoWoS) packaging capacity. Taiwan Semiconductor is working to double CoWoS capacity to meet growing demand for AI processors. Klein said Taiwan Semiconductor could accelerate production by installing additional manufacturing equipment rather than waiting for entirely new factories.

Taiwan Semiconductor is expanding operations in Taiwan, Japan and Arizona. Taiwan Semiconductor has committed to ASML Holding's $400 million High-NA EUV technology. Taiwan Semiconductor is reportedly considering another manufacturing site in Texas.

The capacity shortage is making manufacturing agreements harder to secure for emerging chip designers. Klein said Taiwan Semiconductor evaluates customers using long-term demand forecasts, target markets and expected production requirements rather than immediate orders alone. Sid Sheth of dMatrix said Taiwan Semiconductor remains highly selective and expects credible demand projections from customers. Sheth said competitive products, relationships and consistent execution are essential to securing production capacity.

Intel and Samsung Electronics could benefit from Taiwan Semiconductor's manufacturing constraints as customers explore alternative manufacturing partners. Klein said Intel CEO Lip-Bu Tan is working to strengthen manufacturing operations and attract external foundry customers. Potential Intel customers could include Apple, NVIDIA and companies linked to Elon Musk, although such agreements remain speculative. Strong AI demand continues to reinforce Taiwan Semiconductor's position in advanced chip manufacturing. However, limited wafer and packaging capacity remains a critical challenge for the broader AI industry.

Taiwan Semiconductor shares have gained nearly 40% in 2026, compared with a more than 60% increase in the PHLX Semiconductor Index. Benzinga Pro data showed Taiwan Semiconductor shares fell 0.30% to $421 during premarket trading Friday.