TSMC warns Nvidia and Broadcom of capacity squeeze as AI chip demand surges

Intel re-emerges as alternative supplier

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, has told key customers it cannot meet all of their growing demand for advanced AI processors.

According to The Information, the company has informed Nvidia and Broadcom that production capacity at its most advanced manufacturing nodes is increasingly constrained, as demand for AI chips continues to accelerate.

The development signals mounting pressure on the global semiconductor supply chain, where cutting-edge manufacturing capacity is finite and competition among customers is intensifying.

TSMC has long been regarded as the industry's most important gatekeeper, producing the world's most advanced chips for companies with leading designs.

However, the rapid expansion of AI has stretched its resources, with hyperscale cloud providers and chip designers all seeking priority access at the same time.

Industry analysts say lead times at advanced nodes are now extending across multiple quarters, forcing some customers to look elsewhere for additional production.

Intel re-emerges as alternative supplier

That situation has renewed attention on Intel, which has been attempting to rebuild its manufacturing business after years of delays and setbacks.

Intel does not need to displace TSMC as the industry leader to benefit from the current environment, analysts say.

Instead, it can act as a pressure valve for an overheated supply chain, offering something that has become increasingly valuable: available capacity.

Intel's foundry business also provides geographic diversification and alignment with US industrial policy - factors that are gaining importance for technology firms facing multi-quarter production delays.

Intel has struggled in recent years on several fronts. Manufacturing delays allowed rivals to gain an advantage, while AMD steadily took market share in PC and server processors.

Despite that, investor sentiment has improved markedly.

The company's shares are up 19% so far in 2026, following strong early-year trading and renewed confidence in its long-term strategy.

The stock rose sharply last week following favourable comments from President Donald Trump, who praised Intel's latest processors after a meeting with the company's chief executive, Lip-Bu Tan.

According to reports, the meeting was positive, with the president commending efforts to manufacture cutting-edge chips in the United States.

Nvidia has invested capital into Intel, and there has been speculation that Apple may also use Intel's foundry services for some chip production.

Sector confidence boosted by TSMC results

Optimism across the semiconductor sector was reinforced last week after TSMC reported better-than-expected earnings.

The company posted a 35% rise in fourth-quarter profit and said it plans to increase capital spending in 2026, signalling confidence that demand linked to AI computing will remain strong.

"We expect our business to be supported by continued strong demand for our leading-edge process technologies," said TSMC's finance chief, Wendell Huang, during an earnings call.

Shares in TSMC rose more than 6% following the announcement.

In the US, Nvidia gained more than 2%, AMD climbed almost 2%, and Broadcom added around 1%.

Semiconductor equipment makers, including Applied Materials, also advanced.