TSMC Advanced Chip Capacity Sold Out Through H1 2028 Amid AI Boom, Expert Says

Taiwan Semiconductor Manufacturing Co.'s (NYSE: TSM) most advanced chipmaking capacity is fully booked through the first half of 2028, a direct result of insatiable demand from the artificial intelligence sector, according to a semiconductor research expert. The analysis, presented at a Piper Sandler webinar Tuesday, highlights a growing industry bottleneck where supply chain capabilities, not customer orders, are becoming the primary constraint on growth.

Unprecedented AI Demand Creates Bottlenecks

The expert stated that soaring AI-driven demand is expected to fuel TSMC's capital expenditure, projecting it to grow at approximately 15% annually through 2029. This intense demand extends beyond the cutting edge, with the company's lagging-edge capacity for automotive and industrial applications also facing constraints.

The key takeaway is a market shift where growth is increasingly limited by what the supply chain can deliver rather than by customer demand. This has created significant challenges for equipment vendors and other component suppliers trying to keep pace with the world's largest foundry.

Supply Chain and Production Hurdles

Several critical areas are struggling to meet TSMC's aggressive expansion plans, creating a series of production hurdles:

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• Equipment Suppliers: Tool vendors, particularly those specializing in extreme ultraviolet (EUV) lithography, are finding it difficult to ship equipment fast enough to meet TSMC's build-out and upgrade schedules.
• Advanced Packaging: Capacity for Chip-on-Wafer-on-Substrate (CoWoS) packaging will remain a bottleneck through 2028, despite planned expansions of 40% in 2027 and another 25% in 2028.
• Memory Shortages: The availability of High Bandwidth Memory (HBM), DRAM, and flash memory is described as the largest system-level risk, forcing designers to make trade-offs in next-generation systems.
• Engineering Talent: TSMC is reportedly facing manpower shortages for the numerous fabrication plants it currently has under construction.

TSMC's Competitive Edge and Future Roadmap

Despite these challenges, the expert noted TSMC maintains a significant technological advantage over its rivals. The company reportedly holds a six-quarter yield lead over Samsung and an 11-quarter lead over Intel (NASDAQ: INTC) at the 2nm equivalent process node.

TSMC is targeting a monthly production of 200,000 wafers for its 2nm node in 2027, while its next-generation A16 node is already in the risk production phase. The analysis also pointed to a future transition from CoWoS to Chip-on-Panel-on-Substrate (CoPoS) technology, potentially using glass substrates in 2029 to increase output.

This demand is being driven by a broadening customer base beyond traditional GPU leaders like Nvidia (NASDAQ: NVDA) to include custom ASICs for major tech firms. The expert forecasts total XPU (GPU and ASIC) shipments to reach 14 million units in 2026, increasing by 50% in 2027 and another 40% in 2028, with ASICs from Google (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), and OpenAI driving a significant portion of that growth.