TSMC warns chip supply won't meet AI-fueled demand for years despite massive expansion

TSMC warns chip supply won't meet AI-fueled demand for years

Taiwan Semiconductor Manufacturing Company's global chip supply will fall short of AI-fueled demand for years to come, chief executive officer C.C. Wei said, suggesting production capacity remains a key bottleneck in the buildout of global computing infrastructure. TSMC won't be able to fulfill demand led by American customers even as more manufacturing capacity comes online in the U.S. over the next few years, Wei told shareholders on Thursday. Still, Taiwan's largest company -- which makes the majority of the world's advanced semiconductors for AI -- will refrain from initiating the sort of abrupt price hikes that shook up the memory chip sector, Wei added. TSMC's intent is to ensure a stable business, he said at an annual shareholders' meeting in Hsinchu, Taiwan. Wei reiterated a forecast for sales growth of more than 30% for this year -- an outlook TSMC raised just weeks ago. Asia's largest company is an essential player in the global AI industry, making cutting-edge semiconductors for the likes of Nvidia and AMD. TSMC has been expanding its footprint beyond its home island to add capacity, yet even that isn't enough to satisfy all needs with major hyperscalers set to spend $725 billion on AI this year alone. "It will be a long time before we can meet customer demand," Wei said. TSMC is racing to expand at a time customers from Nvidia to Broadcom are vying for access to its cutting-edge facilities. As part of the U.S.-Taiwan trade pact, the Asian company envisions building at least four more U.S. chipmaking plants -- on top of six already planned that entails $165 billion in investments -- requiring roughly an additional $100 billion of capital. Two plots of land TSMC has acquired in Arizona should be enough to satisfy its needs for a decade, Wei added. TSMC's shares slid 1.7% in Taipei after Broadcom provided a disappointing outlook. Still, the stock has more than quadrupled over the past three years, fueled by a surge in its core business. On Thursday, Wei reiterated that TSMC staff will get more than a 30% bump in their bonus payouts this year on average, addressing growing demands for the winners of the AI boom to share more of their profits. In April, the company raised its full-year sales guidance and said its own capital spending should trend toward the upper end of an existing forecast range of as much as $56 billion.

TSMC working hard to meet chip demand, would 'like' to hike prices

HSINCHU, Taiwan, June 4 (Reuters) - Taiwan's TSMC, the world's largest contract chipmaker, is striving to keep up with demand and avoid becoming a bottleneck in the global supply chain during the relentless boom in artificial intelligence, its CEO said on Thursday. C.C. Wei, speaking at the company's annual shareholder meeting in the Taiwanese city of Hsinchu, said customers are still upbeat on the outlook for AI, while TSMC is monitoring the impact of rising component costs. "Customer demand is so high, and we can only support so much. We are already working very hard," Wei told reporters after the meeting, adding that the rapid growth of AI had left many suppliers - and upstream vendors - struggling to meet demand. "We are doing our best to ensure TSMC does not become a bottleneck," he said, adding that such constraints exist throughout the supply chain. Asked during the shareholder meeting whether TSMC could raise prices for customers, Wei said he would "like to do that", although he added the company would refrain from the abrupt price hikes that some memory firms have imposed. "I envy their 80% gross margins, but I would never do that," he told reporters. TAIWAN HAS CRUCIAL ROLE IN AI SUPPLY CHAIN TSMC continues to see increasing adoption of AI models across consumer, enterprise and sovereign applications, with that trend driving demand for greater computing power which in turn supports strong demand for advanced semiconductor chips. Taiwan plays a crucial role in the global AI supply chain for companies including Nvidia and Apple, and its position is anchored by TSMC. Wei said TSMC was working hard to meet all customer demands, but that it would take a "very long time" to fully satisfy American customers' needs with production in the U.S. TSMC is investing $165 billion to build new factories in the U.S. state of Arizona, where Wei told reporters the company's two parcels of land there should be sufficient for the next 10 years. Wei also said TSMC's previous target of locating 30% of its 2-nanometer-and-below capacity in the U.S. was becoming hard to achieve, citing challenges including delays in obtaining environmental permits and a shortage of construction workers. He said TSMC's stock performance over the past year had been remarkable, with its share price climbing to T$2,425 by Wednesday, up from T$950 on June 3 last year. Its shares were down more than 1% on Thursday, in line with the benchmark index. TSMC WORKING ON REDUCING COST OF HIGH-NA TECHNOLOGY Asked whether TSMC wanted to invest in ASML's next-generation High-NA EUV machines, which can cost up to $400 million each, Wei said his company had purchased the Dutch firm's High-NA tools and was conducting R&D efforts. The machines are advanced lithography systems that are used to transfer intricate patterns onto silicon wafers to form integrated circuits and other devices. "We do not currently need it for production because the cost is still somewhat high," he said. "We will continue working to lower the cost and maximize its benefits and once the economics make sense, we will bring it into production." Amid recent worker tensions over pay in South Korea, where Samsung Electronics last month averted a strike, TSMC said it was fully committed to taking care of its employees, as the beneficiaries of the AI boom come under growing pressure to share more of their rapidly growing income. "(Our) employee profit sharing increased by about 30% from 2023 to 2024 and again by about 30% from 2024 to 2025," Wei said. "We are confident it will rise by another 30% in 2026." "We believe this represents strong compensation for our employees," he said, adding there is no ceiling in terms of employee profit sharing as it will continue to grow. TSMC SEES AUTONOMOUS VEHICLES, ROBOTS DRIVING GROWTH Looking ahead, Wei said he views autonomous vehicles and robots as long-term growth drivers, and that the company will be working hard to ensure robots can succeed. Taiwan remains TSMC's most efficient manufacturing area, which is home to its best talent, core R&D and largest production base, he added. The island this week hosts the annual Computex conference, where leaders of some of the world's most powerful tech companies are gathering. Executives from the likes of Nvidia and Intel have heaped praise on Taiwan's central role in the global supply chain. "Taiwan will continue to have a very significant advantage in the AI industry. For the foreseeable future, it will not be easy for other countries to compete," Wei told reporters. (Reporting by Wen-Yee Lee; Editing by Anne Marie Roantree, Thomas Derpinghaus and Jan Harvey)

TSMC CEO Sees No End in Sight for Chip Demand

Cost concerns have raised doubts about the longevity of the artificial-intelligence boom, but the world's largest contract chip maker sees no signs of a pullback in appetite for the semiconductors that power AI. C.C. Wei, chief executive of TSMC, said customer demand continues to outpace the company's ability to add manufacturing capacity. Speaking at an annual shareholders' meeting on Thursday, the CEO said TSMC plans to add even more production, expanding operations in Taiwan, Japan, Germany, and the U.S., where it has major clients like Apple and Nvidia. "We are working very hard to build production lines in the U.S., but it is still not enough, far from enough," Wei said, noting that most of the demand for high-end chips comes from U.S. clients. As the rapid evolution of AI raises computing requirements, Wei predicts a sustained rise in demand for advanced semiconductors. "Our customers and their customers continue to give us a very positive outlook on AI," Wei said. "We remain confident in the long-term AI megatrend and continue to see semiconductors as a fundamental necessity." Still, TSMC is keeping a close eye on component costs in price-sensitive consumer markets, as well as geopolitical developments in the Middle East that pose supply-chain risks. The conflict has disrupted supplies of energy and key industrial inputs like helium, raising costs across manufacturing sectors. To protect margins, some companies have raised product prices. But Wei seemed to be against the idea of hiking prices of TSMC chips, even with demand booming and costs climbing. TSMC won't adopt the pricing practices seen in the memory-chip industry, where producers sharply increase prices during supply squeezes, the CEO said. "Our customers are partners," he said. TSMC's meeting took place against a backdrop of heightened industry competition, with Samsung Electronics and Intel pushing ahead with next-generation production technologies, closing the gap on the Taiwanese company. It is a challenge that hasn't fazed Wei, who struck a confident tone about his company's ability to stay on top and maintain its competitive advantage as firms vie for global tech talent, as highlighted by TSMC's continuing legal battle with a former executive who joined Intel. "We will absolutely do everything in our power to protect TSMC's own technology and information confidentiality," Wei said. Commenting on Elon Musk's plan to build his own chip fab, Wei said, "I wish him the best." "We have never lacked competitors over the past nearly 40 years," he said. "We have always been a winner, and that will continue in the future."

TSMC boss upbeat on outlook as AI boom shows no sign of easing

HSINCHU, Taiwan, June 4 (Reuters) - Taiwan's TSMC, the world's largest contract chipmaker, said on Thursday it is confident in its growth over the next few years, driven by robust demand for computing power and advanced semiconductors, as it rides an AI boom. Chief Executive C.C. Wei, speaking at TSMC's annual shareholders' meeting in the northern Taiwanese city of Hsinchu, added that its customers continue to express a positive outlook for the AI industry. "We continue to see increasing adoption of AI models across consumer, enterprise and sovereign AI applications. This trend is driving demand for greater computing power, which in turn supports strong demand for advanced semiconductor chips," Wei said. Taiwan has taken centrestage this week as it hosts the annual Computex conference, where leaders of some of the world's most powerful tech companies are gathering, with executives from the likes of Nvidia to Intel praising the island's central role in the global supply chain. In April, TSMC, a major Nvidia supplier, raised its annual revenue forecast and said it was stepping up capital spending this year to meet a relentless hunger for its products. (Reporting by Wen-Yee Lee; Editing by Anne Marie Roantree and Muralikumar Anantharaman)