Nvidia set to supplant Apple as TSMC's top customer, signaling chip industry's 'changing dynamic'

When Jensen Huang archetypal met Morris Chang decades ago, helium told the laminitis of Taiwan Semiconductor Manufacturing Company that 1 time Nvidia would beryllium the spot foundry's biggest customer.

That's a communicative Huang, Nvidia's CEO, was asked astir connected a caller podcast, and it's a committedness that is connected way to beryllium realized this year.

Nvidia volition go TSMC's largest lawsuit this year, according to expert estimates and Huang himself. Apple is believed to presently beryllium TSMC's largest customer, mostly to manufacture A-series chips for iPhones and M-series chips for PCs and servers.

The positional swap volition people a cardinal displacement successful the semiconductor industry, reflecting Nvidia's increasing value amid the AI infrastructure buildout.

On the podcast published this month, Huang said that power has already happened.

"Morris volition beryllium blessed to cognize Nvidia is TSMC's largest lawsuit now," said Huang, adding that helium was personally precise blessed astir the milestone.

Creative Strategies main expert Ben Bajarin said helium projects Nvidia to make $33 cardinal successful TSMC gross this year, oregon astir 22% of the spot foundry's total. Apple, by comparison, is projected to make astir $27 billion, oregon astir 18% of TSMC's revenue.

"The standard of this drastically changed," Bajarin said. "A mates years ago, you could conscionable spot however overmuch much capableness Nvidia was demanding from TSMC."

Nvidia and TSMC declined to comment. Apple didn't respond to a petition for comment.

Apple reports first-quarter net connected Thursday, and the institution is forecasting arsenic overmuch arsenic 12% gross maturation successful the quarter.

TSMC doesn't sermon the ranking of its 522 customers, though it said successful March that its apical 10 customers made up 76% of the company's nett revenue, adding that its largest lawsuit astatine the clip accounted for 22% of its nett revenue. The second-largest lawsuit accounted for 12% of nett revenue.

Nvidia's interaction is evident successful the spot foundry's financials.

TSMC's HPC sales, which see Nvidia's AI chips, made up 55% of nett gross successful fourth-quarter net that were reported earlier this month. That was up from 40% successful 2022, the twelvemonth the AI roar kicked disconnected with the motorboat of OpenAI's ChatGPT. AI accelerators, which are presently dominated by Nvidia, made up "high-teens" of TSMC's full 2025 sales.

Nvidia's income are rising rapidly and outpacing Apple's growth. In February, Nvidia is expected to study 66% maturation to $213 cardinal successful income successful its fiscal 2026, which ends this month. Apple's maturation successful its fiscal 2025, ended successful September, was 6.4%.

Additionally, Nvidia's AI chips are bigger and much analyzable to nutrient than what Apple manufactures, which means they outgo more.

The displacement besides highlights TSMC's relation arsenic the largest declaration proviso foundry successful the world, providing spot manufacturing and related services to astir each processor maker, including Advanced Micro Devices, Intel, Broadcom and Qualcomm.

TSMC has an estimated 70% of the full marketplace for spot manufacturing revenue, according to market researcher TrendForce. Although rival Intel has said it wants to marque starring node chips successful the U.S., it has yet to denote an anchor customer, and connected Thursday, the institution saw its banal plunge 13% aft reporting brushed first-quarter guidance and accumulation concerns.

Huang understands the value of TSMC's proviso to Nvidia.

He visited Taiwan five times past year. In November, helium attended the foundry's yearly sports day portion wearing the aforesaid reddish garment arsenic TSMC employees. On that trip, helium besides reportedly visited TSMC's fab equipped with the 3 nanometer exertion utilized to nutrient Nvidia's Rubin chip, which is successful afloat accumulation and expected to vessel aboriginal this year.

TSMC's latest quarterly results showed however the company's concern is being transformed by the request for AI chips. Company executives said they were weighing accrued concern into further factories, but were acting cautiously.

For the December quarter, TSMC reported $33.73 cardinal successful nett revenue, up 21% connected an yearly basis, and projected 30% maturation successful income this year. The beardown forecast is driven by TSMC's occurrence successful AI chips, which the institution expects to turn astatine a "mid-to-high-fifties" compound maturation complaint done 2029.

"Our customers' customer, who are chiefly the unreality work providers, are besides providing beardown signals and reaching retired straight to petition the capableness to enactment their business," TSMC CEO C.C. Wei said, according to a institution transcript. "Thus, our condemnation successful the multi-year AI mega-trend remains strong."

TSMC said it planned to walk arsenic overmuch arsenic $56 cardinal connected superior expenditures this twelvemonth and expects to summation that to seizure AI demand, adding that investments made this twelvemonth would travel online successful 2028. Still, the institution remains blimpish astir semipermanent projections that tin span 5 years into the future.

"I'm besides precise tense astir it, you bet," Wei said erstwhile asked astir an AI bubble, according to the transcript. "Because we person to put astir $52 cardinal to $56 cardinal for the CapEx, right?"

TSMC and Apple person had a adjacent narration due to the fact that of the measurement of iPhone chips, which are smaller than AI GPUs and truthful little costly per unit. The stableness of that narration allowed TSMC to aggressively put successful caller capableness for cutting-edge technologies, which are called the "leading nodes."

Apple wanted the latest accumulation nodes due to the fact that the much precocious the manufacturing process, the much power-efficient the spot tin be, improving instrumentality artillery life. But powerfulness ratio connected the latest nodes is besides important to Nvidia. That's due to the fact that vigor is an input into the instrumentality connected concern connected its AI systems.

"It conscionable changes the dynamic wherever what was the driving unit for TSMC — Apple — present shifts to Nvidia, and to immoderate grade AMD, which is benignant of the guarantee-scale lawsuit that helps you warrant the summation successful CapEx to each caller node," Bajarin said.

Apple volition inactive request tons of chips from TSMC, but connected the Taiwanese company's net telephone earlier this month, the lone lawsuit whose merchandise names were mentioned was Nvidia.

"My customers, their merchandise improvements proceed to increase," Wei said. "It's well-known from Hopper to Blackwell to Rubin — that astir doubles, triples their performance."

Wei added that, from his constituent of view, the bottleneck successful the AI manufacture remains "TSMC's wafer supply."