TSMC says AI chip demand still far exceeds what it can supply

TSMC says demand for AI chips is still well above what it can produce. The company posted its sixth straight record quarterly profit, with net income up about 69% from a year earlier and revenue up 50.9%, and described AI demand as extremely robust.

It held its capital spending plan at up to $64 billion and announced a new 3nm fab in Taiwan targeting a 2028 ramp. It is also exploring an expansion in Texas and confirmed talks related to the Terafab project. Separately, Samsung was reported to be planning to use TSMC's 3nm process for the base layer of Nvidia's custom high-bandwidth memory chips, which would be the first time the two rivals have worked together on high-bandwidth memory.

The results came in a nervous week for chip stocks. TSMC's better-than-expected outlook was not enough to stop a global tech sell-off, and its shares fell on AI worries four days after the company called demand extremely robust.

Taiwan's government is also planning US industrial parks, starting with a Texas complex of up to $4 billion, to build a supply chain base for Nvidia, TSMC and Foxconn.

Our take

Every model roadmap still runs through one company's factories. Investor mood swings, but the supply limit TSMC describes is the constraint that actually sets how fast AI capacity grows.