TSMC Advanced Nodes at Full Capacity as AI Demand Drives Growth

According to semiconductor supply chain sources, TSMC is expected to maintain full capacity utilization for its 4nm, 3nm, and upcoming 2nm process nodes through the end of 2025, despite recent reports that MediaTek and Qualcomm have reduced future wafer orders by 10%–15% due to weaker Android smartphone demand. The overall impact on TSMC remains limited.

Strong growth in artificial intelligence (AI) continues to drive expansion in advanced process and packaging capacity. Major AI customers, including NVIDIA and Google, are sustaining robust demand and are prepared to absorb unused capacity. For instance, NVIDIA’s Blackwell GPUs are based on 4nm technology, while its next-generation Rubin architecture is transitioning to 3nm, reflecting ongoing demand momentum.

Since the second half of 2025, rapid AI data center expansion has also tightened the supply of key upstream materials such as memory, copper-clad laminates (CCL), and fiberglass cloth, driving up manufacturing costs. In particular, surging demand for high-bandwidth memory (HBM) has constrained general-purpose DRAM supply, leading to shortages in DDR4 and DDR5.

Rising memory prices are creating dual cost pressures for consumer electronics. Higher component costs—especially for memory and PCBs—are squeezing margins for device makers, while limited room for price increases is weakening consumer demand. As a result, global shipment forecasts for smartphones and laptops in 2026 have been revised downward multiple times.

Geopolitical uncertainties are further weighing on the market. Escalating tensions in the Middle East have pushed up oil prices, increasing manufacturing and logistics costs while dampening consumer purchasing power. At the same time, persistent inflation and cautious monetary policy expectations may delay interest rate cuts, slowing the recovery of end-market demand.

TSMC is scheduled to hold its earnings call on April 16, with prior guidance projecting first-quarter 2026 revenue between $34.6 billion and $35.8 billion and gross margins of approximately 63%–65%. Market expectations suggest that strong AI-related demand will help limit any revenue decline in the second quarter, allowing TSMC’s performance to remain relatively decoupled from the weaker consumer electronics cycle.