Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is accelerating capacity expansion as surging AI demand from Nvidia Corp. (NASDAQ:NVDA) puts new pressure on long-standing partners like Apple Inc. (NASDAQ:AAPL).
Nvidia CEO Jensen Huang said Taiwan Semiconductor needs to "work very hard" to keep up with rapidly rising demand, warning that Nvidia alone could require the foundry to more than double its chip production capacity over the next decade.
Speaking in Taiwan after a banquet with senior supply-chain executives, including Taiwan Semiconductor Chairman and CEO C.C. Wei, Huang said Nvidia "needs a lot of wafers" this year as it scales AI infrastructure, SCMP reported on Sunday.
Nvidia has now become Taiwan Semiconductor's largest customer and was among the first adopters of its advanced A16 process node.
Huang said Nvidia's demand for leading-edge process technologies would be enough by itself to drive a capacity increase of more than 100% over time, TechNode reported on Monday.
Taiwan Semiconductor has already signaled aggressive investment plans, saying capital spending could rise as much as 37% this year to $56 billion and grow significantly again in 2028 and 2029.
Apple Reassesses Strategy
Meanwhile, Apple is reassessing its reliance on Taiwan Semiconductor.
Riding the AI boom, Nvidia has dethroned Apple as Taiwan Semiconductor's top customer, capturing a major slice of the world's most advanced semiconductor capacity.
According to the Wall Street Journal, Apple is evaluating whether to move part of its low-end processor production to alternative suppliers, a shift that would end more than a decade of exclusive cooperation with Taiwan Semiconductor, the TechNode reported on Monday.
Rising memory prices from suppliers such as Samsung Electronics Co, Ltd (OTC:SSNLF) and SK Hynix are also pressuring Apple's margins.
Analysts cited by IThome note that Intel Corp (NASDAQ:INTC) could begin manufacturing chips for non-Pro iPhone models using its 14A process as early as 2028.
Taiwan Semiconductor stock gained over 65% in the last 12 months, leapfrogging the likes of Tesla Inc. (NASDAQ:TSLA) and Broadcom Inc. (NASDAQ:AVGO).
Nvidia gained 64% over the last 12 months, becoming the first company to hit a $4.5 trillion market cap last October, toppling the Big Tech giants like Apple and Microsoft Corp. (NASDAQ:MSFT).
Price Action: In premarket trading Monday, Nvidia shares slid 2.05% to $187.21, while Apple dipped 0.42% to $258.39. Taiwan Semiconductor also traded lower, down 1.15% at $326.75, according to Benzinga Pro.
Photo by Andrey Bayda via Shutterstock
