NVIDIA reserves critical capacity from TSMC and could stifle rivals in race for AI chips

The AI ​​hype-driven shift in hardware component production may see advanced packaging technologies as the next big bottleneck for production capacity. According to a report from DigiTimes, NVIDIA alone has already allocated more than 50% of TSMC’s capacity for 2026.

TSMC is the world’s leading advanced chip manufacturer today not only because of its 3nm and 2nm lithographs, but also because of its packaging technologies, mainly CoWoS. The report out of China claims that NVIDIA has ordered between 800,000 and 850,000 wafers for 2026 – possibly for Blackwell Ultra and the start of Vera Rubin components.

The number represents more than 50% of what TSMC can offer with its packaging today. With other giants like AMD and Broadcom following closely behind, there isn’t much of the manufacturer’s capacity left for more competitors, making the competitive chip manufacturing market even more exclusive.

NVIDA may place even more orders for TSMC

As the accumulation of orders from NVIDIA to TSMC is not enough at the moment, analysts raise the possibility of the company occupying even more of the Taiwanese semiconductor manufacturer’s forges.

This is because, recently, we had the release of exports of NVIDIA H200 chips to China, which could result in large orders for the components arriving soon. We still need to follow developments to see if China will, in fact, rush to take advantage of the release – something that did not happen with the H20 GPUs.

The H200, however, is somewhat more powerful and potential Chinese customers cannot easily find similar models, as is often the case with H20 boards.

TSMC chases expansion

While demand overheats, TSMC is not watching its production capacity become saturated. The company has invested in expanding its facilities, not only for manufacturing advanced chips, but also for their packaging.

One of the main projects takes place in the United States, in Arizona. TSMC’s factories in the country still need to ship components back to Taiwan for packaging, so the company is working on creating facilities for full chip production in the country.

Read more:

The forecast, however, is still some way off, so 2026 should prove to be a tight year for the capacity of the Taiwanese semiconductor manufacturer’s forges.

Via: WCCFTech