Jensen Huang: TSMC Must Double Output in 10 Years to Meet NVIDIA’s AI Demand
Jensen Huang, the CEO of NVIDIA, has highlighted the urgent need for TSMC to significantly increase its production capacity. He stated that TSMC must double its output over the next ten years to meet the escalating demand from NVIDIA’s AI ventures.
TSMC’s Capacity Expansion Plans
The pressure on TSMC’s production lines is immense. Huang’s comments indicate a clear expectation that the demand for AI infrastructure will likely continue to grow well into the future. TSMC is already planning major expansions of its capabilities to keep up with this anticipated demand.
Massive Investment in Infrastructure
TSMC’s investments are part of an aggressive buildout strategy. The company is focusing on what Huang called the “world’s largest infrastructure” project for semiconductor manufacturing. This buildout could exceed $250 billion and includes advanced packaging, semiconductor fabrication, and research and development centers located in the United States.
Geopolitical Considerations
In response to geopolitical factors, TSMC’s expansion strategy now includes establishing supply chains in the EU, Japan, and the U.S. The company’s Arizona facilities are transitioning to produce 3nm chips, with future plans to adopt even more advanced technologies.
NVIDIA’s Dominance in TSMC’s Production
Currently, NVIDIA holds a significant share of TSMC’s production capabilities. In a rapid shift, NVIDIA has become TSMC’s largest customer, surpassing Apple in recent years. Its demand is largely driven by major projects like Grace Blackwell and Vera Rubin, which require vast resources from TSMC.
Prepayment Options and Future Allocations
TSMC’s option for capacity prepayments indicates a firm commitment to allocate a substantial portion of future production to NVIDIA and other high-performance computing (HPC) clients. This arrangement demonstrates the eagerness of both TSMC and NVIDIA to capitalize on the booming AI infrastructure market.
NVIDIA’s Competitive Edge
NVIDIA’s position in the market is bolstered by its ability to scale production quickly and efficiently. This edge significantly mitigates competition from other companies, like ASIC manufacturers and AMD. Huang’s strategic relationships with suppliers in Taiwan and globally further enhance NVIDIA’s access to critical production capabilities.
As the AI industry evolves, the relationship between NVIDIA and TSMC will be crucial. Their collaborative efforts will shape the future of AI infrastructure and semiconductor manufacturing.
