TSMC CEO C.C. Wei has told company shareholders that it still won’t be able to completely address the production demands for AI chips in the years to come. Even though the company has opened multiple fabs across the world, including the one in Arizona, the insatiable demand for the most advanced processors means that there still isn’t enough production capacity to go around for all customers. Bloomberg reports that the additional capacity that is expected to go online in the U.S. is still not enough to feed the increasing demand from hyperscalers.
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“It will be a long time before we can meet customer demand,” C.C. Wei said. Despite that, TSMC is still forecasting a 30% increase in sales this year. It’s also not taking advantage of the supply bottleneck, with Wei adding that the company will avoid sudden price hikes similar to the memory and storage chip market industry’s experience to ensure business stability.
Hyperscaler buildouts are expected to hit $725 billion just this year. And unless the AI bubble bursts, demand is only expected to go up every year. TSMC has been building many new fabs in Taiwan, the U.S., and other parts of the world. But building these manufacturing plants would take years, and it seems that semiconductor manufacturing demand would outpace supply if the current AI infrastructure build-out continues.
TSMC Arizona’s manufacturing capacity has been sold out through 2027 since early 2025, showing the massive demand for the company’s output. The company is continually expanding this site, too, with its Taiwan headquarters authorizing a $20 billion capital injection last month to continue the development of Fab 21 phase 2. It’s expected that this would allow the company to start mass producing 3nm chips in Arizona in 2027, which is about a year earlier than the original 2028 launch date. There have also been reports of additional fabs and other units, bringing the total Arizona site to 12 fabs, 4 packaging facilities, and an R&D center.
These production shortages mean that TSMC can expect that their expansion plans will have customers once they’re completed. However, this is also an opportunity for Intel, which is trying to win customers for its 18A and 14A processes. Both Apple and Nvidia are reportedly considering Intel for some of their 2028 chip production, and sources say that the former has already reached a preliminary agreement with Team Blue.
The lack of availability has also led Elon Musk into semiconductor manufacturing. Even though building chips is a totally different beast when compared to building electric cars and even rocket ships, it seems that the billionaire founder is ready to take on the challenge with Terafab. It seems that he’s pretty serious, too, with his team already in talks with various suppliers and that they’re willing to pay a premium to ensure priority.
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