TSMC says it cannot keep up with US demand for AI chips

In short: The world’s biggest chipmaker says demand for AI chips is outpacing what it can produce for US customers, and catching up could take a long time.

What's going on

Taiwan Semiconductor Manufacturing Co., better known as TSMC, says it is struggling to make enough chips for American customers who are building more AI products and services. Chips are the small parts inside computers and servers that do the actual computing, like an engine in a car.

TSMC CEO C.C. Wei said after a shareholder meeting that customer demand is “so high” that the company can only support so much. He also said TSMC is trying to avoid becoming a bottleneck, meaning the slow point that holds everything else up (like one crowded checkout line slowing down an entire store).

Even with more production planned in the United States, Wei suggested it could take a “very long time” to meet what customers want using US-based factories. TSMC has already opened a factory in Arizona and has said it plans to invest $165 billion in the US. That plan includes three more chip plants, two “advanced packaging” facilities (places that assemble and connect chips so they can be used in devices), and a research and development center.

Wei also said he would like to raise prices, but indicated TSMC would not do sudden, sharp increases. That matters because other parts of the tech supply chain, like memory used in phones and laptops, have already seen shortages and price swings.

What to watch

If TSMC cannot increase supply fast enough, companies building AI systems may face longer wait times and higher costs. Watch for updates on how quickly TSMC’s US expansion ramps up and whether chip prices rise more broadly.

Source: The Verge AI