Demand for AI semiconductors is surging, making the production capacity of TSMC, the world’s largest foundry company, a key bottleneck in the global semiconductor industry. Big tech companies such as Nvidia and Apple are competing fiercely to secure advanced semiconductor output.

CNBC reported on Oct. 15 that TSMC has posted record net profit for six straight quarters through the third quarter this year, but capacity is failing to keep up with rapidly rising demand from customers. Third-quarter net profit rose 68.7 percent from a year earlier to 763.1 billion Taiwan dollars (31.6 trillion won). Revenue rose 50.9 percent to 1.49 trillion Taiwan dollars (62.0 trillion won).

TSMC currently produces advanced semiconductors for Nvidia, AMD and Broadcom. Competition for orders has intensified as Apple, Google, Amazon, Microsoft, Meta and OpenAI have also commissioned it to make their own AI accelerators. Sajiv Dalal (사지브 달랄), head of TSMC North America, said, "I get at least 10 calls a day about securing wafer capacity."

TSMC’s production capacity last year exceeded 17 million 12-inch wafer equivalents a year. Customer demand has surpassed that level. Jordan Klein (조던 클라인), an analyst at Mizuho Securities, warned, "If AI compute demand continues to grow at the current pace over the next 12 to 18 months, TSMC’s production constraints could burden large-scale AI infrastructure investment plans."

TSMC had 534 customers last year, but its top 10 clients accounted for 78 percent of total net revenue. Securing production lines is becoming an even more difficult task for AI semiconductor startups that have to compete with large customers.

TSMC is expanding production facilities in Taiwan, Japan and the United States. Its investment commitment in Arizona totals about $265.0 billion (355.8 trillion won). It will be difficult to resolve supply shortages in the short term as new plants will take considerable time to come online.

The industry is also raising the possibility that Samsung Electronics and Intel could seize on TSMC’s capacity shortfall as an opportunity. Customers are looking for alternative manufacturers to diversify supply chains and strengthen their bargaining power on pricing.

Some analysts say the core of the AI chip race is shifting from design technology alone to who can secure more advanced manufacturing capacity.