TSMC’s 3nm Supply Shortage Amidst High AI Demand: Price Hikes and Reserved Orders

The rapid evolution of the AI industry has created an unprecedented demand for semiconductor resources. At the forefront of this demand is TSMC (Taiwan Semiconductor Manufacturing Company), responsible for supplying chips to tech giants like Apple, Qualcomm, NVIDIA, and AMD. However, TSMC’s 3nm process, considered the “Holy Grail” for the markets, is facing supply constraints.

Reserved Supply and Gigantic Demand

Taiwan Economic Daily reports that TSMC’s 3nm supply is now exclusively reserved by the top four tech giants: Apple, Qualcomm, NVIDIA, and AMD. Orders are secured until 2026. Despite TSMC’s nearly tripled 3nm production capacity compared to last year, industry demand has reached its peak. The N3 process, integral to AI accelerators, is in high demand, and TSMC’s N3P node is gaining traction in the mobile segment.

Price Increases and Strategic Partnerships

While TSMC hasn’t officially announced price hikes, historical trends suggest they may adjust prices based on process value. The company strategically collaborates with partners, and the supply shortage could lead chipmakers to raise prices for their latest products. This ripple effect would impact IC design companies.

Expansion Efforts and Unforeseen Factors

TSMC is committed to expansion, converting some 5nm production lines to 3nm. Their goal is a monthly wafer output of 180,000 units. However, the industry hasn’t factored in Intel’s Lunar Lake debut, which also relies on TSMC’s semiconductors. While it’s not confirmed that consumer products will see price increases due to 3nm supply disruptions, the indicators suggest it’s a possibility.

In summary, TSMC’s 3nm supply shortage poses challenges for the industry, and the interplay between demand, pricing, and strategic decisions will shape the semiconductor landscape in the coming years.