TSMC Admits It Can't Keep Up With Booming AI Chip Demand, Downplays Tariffs
To preface, the current tariff situation has instability as its main pain point for most businesses. Simply put, it is hard to pin down which tariffs will stay or change in the rapidly evolving structures in place. According to Chief Executive C.C. Wei, "Tariffs do have some impact on TSMC, but not directly."
The reasoning here is that tariffs are something importers will have to deal with, not exporters. Wei does state that prices will increase, but that demand is unchanged even with tariffs in place.
"Tariffs can lead to slightly higher prices, and when prices go up, demand goes may go down. If demand drops, TSMC's business could be affected. But I can assure you that AI demand has always been very strong and it's consistently outpacing supply," Wei stated during an annual shareholders meeting.
Lines for the NVIDIA GeForce RTX 50 series GPU at launch were as strong as ever at retailers such as Micro Center. The GeForce RTX 5090 was nearly almost impossible to find at the outset, with its starting $1,999 MSRP ballooning to $3,000 or more for some custom models by NVIDIA's hardware partners. While it was in short supply, the first few months of gaming GPUs saw a steady amount of demand.
The real demand is not with gamers, however, as NVIDIA has clearly demonstrated. The pace at which large corporations such as Microsoft and Google are investing into AI infrastructure is dizzying. The heart of this push is in graphics cards, primarily those from NVIDIA. Furthermore, at the heart of those products are TSMC's chips, which are vital to the chain.
With fierce competition around AI, it is unlikely that large companies with cash reserves from the recent booming economy will reduce spending. The golden goose of consumer profits has not yet reached its peak with consumers, as the enterprise slowly introduces AI into mainstream products.
Competition with China is also steady, with NVIDIA once again at the helm of the battleship. NVIDIA would prefer to work with everyone, however, as it also has a good footing in the Chinese market that is often thwarted by restrictions on its products.
TSMC is also looking at an extra $100 billion outlay for the US, according to Reuters, where the current administration wants to entice it to build more manufacturing capacity. While demand is currently high, other political and geographic factors can also threaten the dominance that TSMC current has globally.
