TSMC Record Quarter Highlights Fierce Battle for AI Chip Capacity, Top 10 Customers Take 78% of Revenue

Taiwan Semiconductor Manufacturing Co. (TSMC) reported its sixth consecutive quarterly record profit on Thursday, expecting fourth-quarter revenue to rise 58% year-over-year. This strong performance underscores the intense competition among AI-driven chipmakers for advanced manufacturing capacity. Major design firms including Nvidia, AMD, Broadcom, as well as Apple, Google, Amazon, Microsoft, Meta, and OpenAI, are facing severe bottlenecks in securing wafer space for their custom AI accelerators.

"The competition is extremely fierce," said Jordan Klein, an analyst at Mizuho Securities, describing it as "a game of who can get the most leverage and supply." TSMC North American CEO Sajiv Dalal noted he receives at least 10 calls a day regarding wafer capacity. While TSMC stated last year it had the capacity to produce more than 17 million 12-inch equivalent wafers, customer demand continues to outstrip this limit.

This imbalance creates structural pressure across the industry. U.S. hyperscalers are projecting well over $700 billion in capital expenditures this year, with analysts expecting that figure to jump in 2027. Klein warned that if compute demand grows at the current rate over the next 12 to 18 months, capacity constraints at TSMC could threaten these massive infrastructure investments and the "aggressive revenue growth targets" from AI companies.

To secure supply, customers are cultivating long-term relationships and locking in contracts years in advance. Nvidia CEO Jensen Huang and AMD CEO Lisa Su have visited Taiwan multiple times this year. Startups like D-Matrix are also vying for capacity, with CEO Sid Sheth identifying TSMC executive Kevin Zhang as a central figure in determining access to factory lines.