Apple, long the “biggest customer of TSMC,” now has to “compete for production capacity” as well.

As the AI boom reshapes the global semiconductor supply chain landscape, Apple’s long-standing “super VIP” status as TSMC’s top customer is facing unprecedented challenges. With chip giants like Nvidia demanding advanced packaging capacity at a rapid pace, Apple is not only confronted with its steepest price hikes in years but must also fiercely compete in a capacity allocation system where it no longer holds dominance.

On January 15, Culpium, a news platform long focused on Taiwan's semiconductor industry, reported, citing informed sources, that beyond price increases, an even harsher reality is unfolding: as GPUs from clients like Nvidia and AMD occupy more and more space on wafers, the iPhone maker’s chip designs can no longer naturally secure priority scheduling at TSMC’s nearly twenty fabs as they did in the past.

Behind this shift is marked financial divergence. According to Culpium’s analysis and supply chain information, Nvidia likely replaced Apple as TSMC’s largest source of income for at least one or two quarters last year. If calculated by the year, even if Apple hasn’t been completely surpassed in 2025, this transition is almost inevitable by 2026.

This also highlights TSMC’s growing pricing power and bargaining ability. According to a Wallstreetcn article, TSMC’s latest financial report shows its gross margin has soared to an astonishing 62.3%, approaching the level of software companies. Analysts note that while Apple still provides indispensable order breadth and stability, in pursuit of extreme performance and profit at advanced process nodes, Nvidia is emerging as the new core driving force.

AI is reshaping the capacity allocation landscape

Although TSMC CFO Wendell Huang said “not to discuss specific customer rankings,” public data have already clearly outlined the trend.

According to Culpium estimates, TSMC’s revenue grew 36% last year to $122 billion, while Nvidia’s sales for the fiscal year ending January 2026 are expected to soar by 62%. By contrast, excluding services, Apple’s product revenue in the twelve months to December 2025 is projected to grow by just 3.6%.

In fact, Apple’s role as TSMC’s main growth engine ended as early as five years ago. Back in 2018, if not for Apple’s incremental purchases, TSMC’s annual sales could even have declined. Now, as smartphone revenue growth slows to 11%, high performance computing (HPC) including AI chips has become TSMC’s new growth pole, with that segment’s revenue surging 48% last year, continuing the previous year’s impressive 58% growth.

TSMC stated on Thursday that revenue in 2026 will grow nearly 30%, but capital expenditure will increase about 32%, reaching a record $52-56 billion. Over the longer term, for the five years to 2029, average annual growth will reach 25%, while AI business will average 55% or higher for the same period. This forecast is higher than their previous estimate in the 40% range.

It’s worth noting that TSMC’s latest financial results showcase ultimate strength not only in record-high revenue and net profit, but also with gross margins approaching those of software firms and fabless chip designers. In the December quarter, this figure hit an astonishing 62.3%, 280 basis points higher than the previous quarter. Without overseas fabs (Arizona and Japan), the margin would be even higher.

As the AI boom continues, each GPU from clients like Nvidia and AMD occupies more wafer area, so Apple’s chip designs can no longer guarantee a foothold at TSMC’s nearly twenty fabs.

Technical roadmap evolution is unfavorable for Apple’s capacity game

According to Culpium, in the short-term, the evolution of the technical roadmap seems to favor companies like Nvidia and AMD, which means Apple will still have to fight for capacity over the next year or two.

TSMC’s most advanced 2nm (N2) process, though already in mass production with Apple as a main buyer, sees its N2P variant and brand-new A16 node scheduled for mass production later this year, both tailored more for high performance computing demands.

TSMC CEO C.C. Wei says the A16 node’s “Super Power Rail” technology—a back-side power delivery network—is best suited for HPC chips with complex signal routing. This technology is also a key battleground for Intel’s attempts to wrest foundry share from TSMC.

Though the A14 node—set for production in 2028—will rebalance support for mobile and HPC, for now Nvidia, with its massive, single-advanced-node demand, clearly matches TSMC’s current expansion pace better than the more diverse Apple product line.

Stability remains Apple’s strength

Although some outsiders like analyst Benedict Evans criticize TSMC for not expanding fast enough to meet all Nvidia’s orders, according to a Wallstreetcn article, CEO C.C. Wei remained highly vigilant about this at TSMC’s earnings call yesterday.

He told investors he was “very nervous,” emphasizing that moving hastily could cause “huge disaster.” Analysis says this caution stems from TSMC’s unique business model: unlike asset-light giants like Google or those combining software and hardware like Nvidia, TSMC carries massive depreciation risk.

Data shows depreciation accounts for as much as 45% of TSMC’s cost of revenue—over four times Google (10%), and nearly eight times fabless Nvidia (5.7%).

Nvidia, a chip designer, enjoys gross margins above 70% with main risks in inventory, whereas for TSMC, a downturn in the industry means newly built fabs become a heavy financial burden.

As Wei said, even with heavy investment this year, those contributions to revenue will be nearly zero for the year, but equipment depreciation hits the books immediately.

Therefore, even though Jensen Huang’s influence is rising, even surpassing Apple CEO Tim Cook in some respects, the “stability” provided by Apple remains essential for TSMC.

Analysis argues that while Nvidia’s products are hot, they're relatively “niche” and focused; whereas Apple’s product line spans more than a dozen TSMC fabs, a manufacturing footprint unmatched by any single AI chip maker. When the AI bubble eventually cools and the market flattens, customers like Apple will once again prove their value.

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