The AI Boom Reshapes Apple’s Standing at TSMC
For over a decade, Apple has been a pivotal partner for Taiwan Semiconductor Manufacturing Company (TSMC), leveraging its cutting-edge manufacturing capabilities to produce the advanced chips that power its devices. This collaboration not only propelled Apple’s product innovation but also justified TSMC’s substantial investments in state-of-the-art fabrication technologies.
However, the landscape is shifting. The surging demand for artificial intelligence (AI) hardware has introduced formidable competitors like NVIDIA and AMD into the fray, vying for TSMC’s advanced chip production capacity. These AI accelerators, essential for machine learning and data processing tasks, require significantly more wafer area than traditional smartphone system-on-chips. Consequently, even a limited number of AI clients can consume a substantial portion of TSMC’s advanced manufacturing output.
This increased competition has led to a reevaluation of priority access at TSMC. Apple, once assured of precedence, now finds itself contending with AI-focused companies willing to pay premiums for the latest process nodes. Reports suggest that NVIDIA may have surpassed Apple as TSMC’s largest customer by revenue in the first half of 2025, signaling a significant shift in the foundry’s client hierarchy.
The implications for Apple are multifaceted. While the tech giant is unlikely to face chip shortages that could delay product launches, the intensified competition may lead to increased production costs. These rising expenses could, in turn, influence Apple’s profit margins or necessitate adjustments in product pricing strategies.
In response to these challenges, Apple may need to explore alternative strategies, such as diversifying its supply chain, investing in in-house chip manufacturing capabilities, or negotiating more favorable terms with TSMC. The evolving dynamics underscore the broader impact of the AI revolution on the semiconductor industry, where traditional alliances are being reshaped by emerging technological demands.
