Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is tightening its grip on the chip industry even as surging AI demand strains its capacity, reshaping competition and supply chains across the sector.
Taiwan Semiconductor Anchors Foundry 2.0 Growth
Taiwan Semiconductor sits at the center of the emerging “Foundry 2.0” model, where integrated manufacturing and packaging define industry dynamics.
Counterpoint Research said the market grew 16% year over year to $320 billion in 2025, driven by demand for AI Graphics Processing Units (GPUs) and Application-Specific Integrated Circuits (ASICs).
The company led this expansion with 36% revenue growth, reinforcing its role as the ecosystem’s anchor.
Meanwhile, other pure-play foundries—including Samsung Electronics Co., Ltd. (OTC:SSNLF), United Microelectronics Corp. (NYSE:UMC), VIS, SMIC, Nexchip, and GlobalFoundries Inc. (NASDAQ:GFS)—posted a slower 8% growth.
Chinese players like SMIC and Nexchip gained momentum from domestic localization efforts, while Samsung positioned itself for growth amid 4nm demand and an upcoming 2nm ramp.
Packaging Bottlenecks Reshape The Ecosystem
The OSAT (Outsourced Semiconductor Assembly and Test) segment grew 10% year over year as demand for advanced packaging increased. Companies like ASE absorbed spillover demand due to Taiwan Semiconductor’s internal constraints, signaling a shift in bottlenecks from front-end manufacturing to back-end packaging.
This shift highlights a more interconnected industry, where success depends not just on wafer production but also on advanced packaging and system-level integration for AI workloads.
Capacity Crunch Pushes Customers To Rivals
Amid this momentum, Taiwan Semiconductor’s 3nm capacity is in “overload,” creating a major bottleneck as AI demand from big tech far exceeds supply, delaying product timelines and shifting focus from innovation to securing capacity.
Meanwhile, its 2nm capacity is fully booked through 2028, opening a window for Samsung Foundry to attract clients such as Nvidia Corp. (NASDAQ:NVDA) and Tesla, Inc. (NASDAQ:TSLA).
Despite the crunch, Taiwan Semiconductor still dominates with a 72% market share, far ahead of Samsung’s 7%.
TSM Price Action: Taiwan Semiconductor shares were up 0.55% at $328.54 during premarket trading on Monday, according to Benzinga Pro data.
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