TSMC warns US production cannot keep pace with AI demand
Chief Executive C.C. Wei indicates that fulfilling American customer needs through domestic manufacturing will take a “very long time,” even as the semiconductor sector approaches a projected $1 trillion valuation by 2027.
Taiwan Semiconductor Manufacturing Co (TSMC) has acknowledged it is unable to fully satisfy the surging demand from American customers for artificial intelligence semiconductors, despite its ongoing manufacturing expansion in the United States. Chief Executive C.C. Wei stated that the company can only support so much demand and warned that fulfilling customer needs through US-based production could take a very long time.
Wei made the comments following a shareholder meeting on Thursday, as reported by Reuters and Bloomberg. He emphasised that while the company is doing its best to ensure TSMC does not become a bottleneck, the current level of customer demand exceeds immediate capacity. The world’s largest semiconductor-maker noted that the surge in AI use has already placed significant constraints on the broader memory industry, with widespread shortages of RAM and NAND Flash memory expected to persist for years.
To address these gaps, TSMC has opened a factory in Arizona and plans to invest $165 billion to construct three additional plants. The expansion package also includes advanced packaging facilities and a research and development centre. However, Wei cautioned that the timeline for bringing this new capacity online is extended, reinforcing the difficulty of rapidly scaling US-based production to meet immediate needs.
On the subject of pricing, Wei indicated a desire to raise TSMC’s prices but stated the company would not issue an abrupt increase similar to those seen in the DRAM and SSD markets. This measured approach comes as the broader industry experiences volatility, highlighted by recent share price fluctuations for competitors such as Broadcom, which saw its shares plunge after missing consensus estimates for AI chip sales.
Looking ahead, research from Deloitte suggests the semiconductor industry could become a $1 trillion industry by 2027. While the AI boom continues to drive high demand and boost semiconductor sales, TSMC’s capacity constraints highlight the structural challenges facing the sector as it attempts to scale infrastructure to support the next wave of technological growth.
