Taiwan Semiconductor Manufacturing Co. (TSMC) reported a record profit for the sixth consecutive quarter, underscoring the surging demand for advanced chips driven by the artificial intelligence (AI) boom. The company expects its fourth-quarter revenue to be 58% higher than the same period last year, fueled by strong demand for its cutting-edge chipmaking technologies [1]. TSMC manufactures the majority of the world's most advanced semiconductors, including graphics processors and central processors for companies such as Nvidia, AMD, and Broadcom, which are essential for AI workloads [1].
The competition among tech giants for TSMC's chip capacity is described as 'extremely fierce,' with companies like Apple, Google, Amazon, Microsoft, Meta, and OpenAI all relying on TSMC to produce custom in-house AI accelerators [1]. According to TSMC North American CEO Sajiv Dalal, he receives at least 10 calls a day regarding wafer capacity, highlighting the intense demand [1]. Last year, TSMC had the capacity to produce over 17 million 12-inch equivalent wafers, but customer demand continues to outpace supply [1].
Analyst Jordan Klein from Mizuho Securities warned that if compute demand continues to grow at the current rate over the next 12 to 18 months, capacity constraints at TSMC could threaten the industry's massive infrastructure investments and the aggressive revenue growth targets set by AI companies [1]. U.S. hyperscalers are projected to spend well over $700 billion in capital expenditures this year, with expectations for that figure to increase in 2027 [1].
The AI sector's ambitions are further challenged by a global shortage of memory chips, while the logic chips produced by TSMC are more complex and costly to manufacture. As a result, companies like Nvidia and AMD negotiate lengthy contracts and bespoke deals with TSMC years in advance. Both Nvidia CEO Jensen Huang and AMD CEO Lisa Su have made multiple visits to Taiwan this year to secure their supply [1].
CONCLUSION
TSMC's record-breaking performance and the fierce competition for its chipmaking capacity underscore the critical role it plays in the AI industry's growth. With demand outstripping supply and capacity constraints looming, the market faces potential bottlenecks that could impact future infrastructure investments and revenue targets for leading tech firms.