TSMC: New Factories Won't Meet Demand for Years, Expansion Lags Behind Demand
The growth of the artificial intelligence market continues to put pressure on the production chain of the most advanced semiconductors.
TSMC, the world's leading chip contract manufacturer, has admitted that the available capacity is still insufficient to meet customer demands and that this situation will continue for several years.
During the shareholders' meeting, CEO C.C. Wei explained that the company is not yet able to fully respond to the demand coming from the AI sector. Despite the opening of new production facilities in various parts of the world, including the United States, the demand for advanced processors continues to grow at a rate faster than the expansion of manufacturing capacity.
According to Wei, it will take a long time before TSMC is able to fully meet customer orders. However, the company maintains very positive forecasts, estimating a revenue growth of 30% during the year. At the same time, the Taiwanese manufacturer clarified that it does not intend to exploit the supply shortage with sudden price increases but prefers to ensure market stability.
The pressure comes primarily from large cloud operators and hyperscalers, who are investing enormous amounts in infrastructure dedicated to artificial intelligence. Overall spending in the sector could reach $725 billion as early as this year.
To address these needs, TSMC is expanding its production presence both in Taiwan and in the United States. However, the establishment of new factories takes a very long time—talking about years—and the demand for production capacity seems destined to remain above the available supply.
A concrete example comes from the Arizona facility. The production capacity of the U.S. site is already fully booked until 2027, a figure that clearly highlights the level of demand. The company also recently approved a capital injection of $20 billion to continue developing phase two of the Fab 21 project.
The expansion is expected to allow mass production of 3-nanometer chips to begin in 2027, which would be about a year ahead of the initial plans that indicated 2028 as the start date. According to various rumors, the Arizona manufacturing complex could include 12 factories, four facilities dedicated to advanced packaging, and a research and development center.
However, the persistent scarcity of production capacity also creates opportunities for other players in the industry. Intel is indeed continuing to promote its 18A and 14A manufacturing processes in an attempt to attract new customers. Apple and NVIDIA are reportedly considering using the company's manufacturing technologies for part of the production planned for 2028, although sources from the Wall Street Journal indicate that Apple and Intel have already signed a preliminary agreement.
The strong demand for advanced semiconductors is also attracting interest from new players. Among them is Elon Musk, who, according to some rumors, is exploring the chip manufacturing sector through the Terafab project. The team is already in contact with several suppliers and is willing to incur higher costs to gain priority in future supplies.