Chip constraints deepen
- AI demand is lifting valuations across Taiwan's semiconductor supply chain while fabrication capacity stays tight. - Reports project TSMC shortages lasting beyond 2027, keeping manufacturing the industry bottleneck. - Analysts warn a lithography 'loophole' and alternative production routes could reshape export-control effects and competitive dynamics (digitimes.com) (aei.org).
Taiwan’s chip supply chain is getting pricier because artificial-intelligence demand is rising faster than the factories that make advanced chips can expand. (digitimes.com) (investor.tsmc.com) Taiwan Semiconductor Manufacturing Co. said on April 16 that first-quarter revenue reached US$35.9 billion and net income rose 58.3% from a year earlier to NT$572.48 billion, while full-year revenue growth in U.S. dollar terms is now expected to exceed 30%. (investor.tsmc.com) (usnews.com) Chief executive C.C. Wei said production capacity remains “very tight,” and TSMC told investors it is expanding 3-nanometer output in Taiwan, the United States and Japan to add volume in 2027 and 2028. Advanced 3-nanometer chips accounted for 25% of wafer revenue in the first quarter. (usnews.com) (investor.tsmc.com) The bottleneck is not only wafer fabrication, which is the step where patterns are etched onto silicon, but also advanced packaging, which is the step that bundles several chip pieces into one high-performance module for AI servers. TSMC said demand for those services is still outrunning supply. (trendforce.com) (digitimes.com) TrendForce, citing TechNews and institutional investors, said TSMC’s CoWoS packaging capacity is expected to reach about 115,000 to 140,000 wafers per month by the end of 2026 and about 170,000 in 2027. DigiTimes reported this week that shortages are still projected to extend beyond 2027. (trendforce.com) (digitimes.com) That squeeze is showing up across Taiwan’s economy. Export orders jumped 65.9% in March from a year earlier to a record US$91.12 billion, the fastest growth since January 2010, as orders for AI-related electronics surged. (bloomberg.com) (goldsea.com) The equipment side is tightening too. ASML, the Dutch company that dominates lithography machines used to print chip circuits, raised its 2026 revenue outlook to €36 billion to €40 billion on April 15 as AI demand lifted orders. (asml.com) (reuters.com) At the same time, Washington is debating how much older lithography gear China should still be able to buy or service. Reuters reported on April 16 that a revised U.S. bill would still include a countrywide restriction on ASML’s deep-ultraviolet immersion tools, even after lawmakers softened other parts of the proposal. (reuters.com) (cnbc.com) The policy fight centers on a simple manufacturing fact: extreme ultraviolet machines are the newest printers, but older deep-ultraviolet machines can still make advanced chips if producers use more steps, more masks and lower yields. The American Enterprise Institute argued in an April 2026 paper that this route gives China a path to scale more domestic chip output than export controls were meant to allow. (aei.org) (cnas.org) TSMC is also trying a second route around the packaging crunch. TrendForce reported that TSMC’s pilot line for CoPoS, a panel-based packaging method meant to fit larger AI chips at lower cost, completed major equipment installation in February, with full line setup expected by June and mass production targeted for 2028 to 2029. (trendforce.com) For now, the market is treating scarcity as durable. TSMC is spending toward the high end of a US$52 billion to US$56 billion capital-expenditure plan for 2026, but its own guidance still points to a supply chain where AI demand keeps outrunning the factories built to serve it. (usnews.com) (investor.tsmc.com)
