Nvidia, Apple, Broadcom in ‘fierce’ battle to make chips at TSMC

As Taiwan Semiconductor Manufacturing Co.’s record quarter makes clear, demand from chipmakers shows no sign of slowing down. In fact, TSMC can’t manufacture quickly enough.

The artificial intelligence boom has created unending need for space on factory lines at the world’s leading chip manufacturer, and it could put a chokehold on the entire industry’s ability to scale. Last year, TSMC said it had the capacity to make more than 17 million 12-inch equivalent wafers. But customers want more.

“The competition is extremely fierce,” said Jordan Klein, an analyst at Mizuho Securities. “It’s a game of who can get the most leverage and supply.”

TSMC makes the vast majority of the world’s most advanced semiconductors, the graphics processors and central processors from Nvidia, AMD and Broadcom that are necessary for running AI workloads. Now a growing number of tech firms – Apple, Google, Amazon, Microsoft, Meta and OpenAI – also rely on TSMC to make custom in-house AI accelerators.

TSMC North American CEO Sajiv Dalal told CNBC he gets at least 10 calls a day about wafer capacity. TSMC posted record profit for a sixth straight quarter on Thursday and expects fourth-quarter revenue to be 58% higher than a year earlier, driven by strong demand for its advanced chipmaking technologies.

If compute demand continues to grow at the current rate over the next 12 to 18 months, Klein said capacity constraints at TSMC could threaten some of the industry’s massive infrastructure investments and the “aggressive revenue growth targets” from the AI companies. U.S. hyperscalers are projecting well over $700 billion in capital expenditures this year, and analysts expect that figure to jump in 2027.

AI ambitions are also threatened by a global shortage of memory chips. The logic chips that TSMC manufactures are more complex and expensive to produce. That means GPU and CPU leaders like Nvidia and AMD work out lengthy contracts and bespoke deals with TSMC behind closed doors years in advance. Nvidia CEO Jensen Huang and AMD CEO Lisa Su have both visited Taiwan multiple times this year.

Sid Sheth, CEO of AI chip startup D-Matrix, has fostered a relationship with TSMC for more than 20 years, and his company relies on TSMC to manufacture its processors. Sheth said that for TSMC customers, many roads lead to Kevin Zhang, a senior vice president of the Taiwanese company and a central figure in determining which chipmakers get access to its coveted factory lines.

He’s “currently probably the most popular person on the planet,” Sheth said in an interview. Sheth said that Jerry Qubain, D-Matrix’s vice president of manufacturing, has been visiting TSMC since 1992 and goes to Taiwan three to four times a year.

“This was even before Nvidia was founded,” Sheth said. “That’s a good example of a person we brought on board because of the relationships he has at TSMC.” Qubain joined D-Matrix in 2024. TSMC declined to participate in this story.

TSMC had 534 customers…