Why There’s An ‘Extremely Fierce’ Battle For TSMC's Limited Chip Manufacturing Capacity

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TL;DR

TSMC's chip manufacturing capacity is fiercely contested, with giants like Apple and Nvidia vying for space amid a global shortage.

Key Insights

78% of net revenue — TSMC's top ten customers account for 78% of its net revenue, with the largest single customer making up 19%.

TSMC's wafer production is set to increase by 10-20% by the end of the year to meet rising demand.

TSMC shipped 15 million wafers in 2025, yet demand continues to outpace supply.

CoWoS reserved for Nvidia — TSMC's advanced packaging technology, CoWoS, is primarily reserved for Nvidia.

Intel catch up — Intel is working to catch up with TSMC, aiming to secure major external customers like Apple and Nvidia.

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Deep Dive

The Battle for TSMC Capacity

Getting manufacturing space at TSMC, the world's largest chipmaker, is intensely competitive. At a forum in Santa Clara, over 100 customers, including giants like Apple and Nvidia, gathered to vie for wafer capacity. TSMC North America President Sajiv Dalal receives numerous daily requests, highlighting the fierce competition. The company supports startups but prioritizes major clients like Nvidia and Apple.

Global Chip Shortage and AI Demand

A global memory chip shortage threatens AI development, with companies like Nvidia and AMD securing supply in Korea. However, the real bottleneck lies in logic chips needed for AI workloads. TSMC's logic wafers are custom-designed and in high demand. Despite shipping 15 million wafers in 2025, TSMC plans a 10-20% capacity increase to meet growing orders, primarily benefiting large customers.

TSMC's Strategic Expansion

To meet long-term demand, TSMC is expanding its manufacturing capacity with new fabs in Taiwan, Japan, and the U.S. They are investing heavily in advanced tools like ASML's lithography machines. Meanwhile, Intel and Samsung are also expanding their U.S. operations, with Intel aiming to catch up to TSMC. The global chip capacity is set to grow significantly, with China leading the expansion.

Takeaways

✓Build strong relationships with TSMC for better wafer allocation.
✓Monitor TSMC's capacity expansions to anticipate market shifts.
✓Consider aligning with major TSMC customers to secure manufacturing space.

Key moments

1:00Fierce Competition

“The competition is extremely fierce. It's a game of who can get the most leverage and supply from TSM.”

3:15AI Demand Pressure

“Nvidia, AMD, Apple really are fighting for every wafer they can get.”

8:57TSMC's Expansion Plans

“TSMC is building new manufacturing lines at unprecedented scale.”

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