TSMC’s 3-nanometer (N3) wafer capacity has become a primary constraint for the artificial intelligence industry. Nvidia, Google, Amazon, and AMD will all migrate to the N3 process simultaneously in 2026. This demand shock has outpaced the foundry’s current expansion capabilities.
AI wafers are projected to consume 86% of total N3 capacity by 2027. TSMC is prioritizing AI customers, a move that potentially displaces production for smartphones and PCs.
The capacity crunch may compel major clients to diversify their foundry partners to secure supply chains. Competitors such as Samsung and Intel could benefit from the resulting supply overflow.