TSMC Has Reached Its Limit: It Is Reportedly Refusing Customer Requests Due to Lack of Production Capacity

The global demand for semiconductors for artificial intelligence is accelerating relentlessly, putting the entire production supply chain under strain. At the forefront is TSMC, which accounts for approximately 70% of the global foundry market and is currently facing a production capacity that cannot fully meet the demand.

According to a report from DigiTimes, orders from Big Tech and AI companies are growing at a rate that outpaces the available production capacity, especially concerning the most advanced nodes. The situation appears particularly critical on the front of the 3nm processes, where availability remains limited and is assigned selectively.

TSMC dedicates much of its high-end production to established customers like Apple and NVIDIA, who receive a significant share of the most advanced wafers. This choice strengthens the competitive advantage of these companies, with direct effects on both the chip market and the end-device market.

In contrast, Intel and AMD reportedly have access that is more limited, with lower volumes compared to those allocated to AI-related products.

The problem doesn't just concern the big names. ASIC designers, including Broadcom, are also experiencing difficulties in securing adequate volumes for custom AI accelerators. Broadcom itself has recently acknowledged that TSMC has reached a concrete limit in production capacity and questioned the idea of potentially unlimited scalability.

This scenario raises questions about the sustainability of the current expansion of AI. The availability of advanced wafers would be a finite resource. The difficulty in obtaining production capacity is forcing many companies to revisit their industrial plans.

Geopolitical factors are further complicating the picture. International tensions, including the conflict involving the United States, Israel, and Iran, are increasing risks for a supply chain already under pressure. Analysts indicate a possible normalization within one or two years, but clearly, making predictions about the future of the market, let alone about a conflict, is quite complex.

In the meantime, attempts at diversification are emerging. Samsung Foundry is trying to attract new clients, including AMD, while Intel continues to work on expanding its production capabilities, not without operational difficulties. The result is a dynamic context in which the balance of the semiconductor sector can change rapidly, with direct effects on the entire technological ecosystem.