Nvidia chief executive Jensen Huang told listeners on a recent podcast that Nvidia has become Taiwan Semiconductor Manufacturing Company's largest customer, displacing Apple after years at the top. The remark is a blunt indicator of how the surge in demand for AI accelerators has reshaped the economics of advanced chipmaking.
TSMC sits at the centre of the global semiconductor industry as the dominant contract manufacturer of cutting‑edge logic chips. Apple long held the largest share of TSMC’s capacity because of iPhone volumes and regular node transitions, but the requirements of hyperscale data centres and generative AI have driven Nvidia’s order book to unprecedented heights, prioritising the most advanced process nodes and packaging lines.
For TSMC, a customer mix now led by Nvidia has clear commercial consequences. Advanced‑node work—3nm and below—commands higher margins and is capacity constrained; shifting more of that revenue to AI customers lifts TSMC’s pricing power and validates its heavy capital expenditure plans. That reallocation can also squeeze capacity for other large buyers, forcing chip designers and device makers to revise product timetables or seek alternative foundries.
The change also has geopolitical resonance. The concentration of world‑leading compute chip production in Taiwanese fabs, paired with growing U.S. controls on exports of high‑end AI accelerators, makes the supply chain a strategic asset and a point of diplomatic friction. Policymakers in Washington, Taipei and other capitals will watch how manufacturing footprints, talent flows and investment incentives evolve as firms chase both capacity and regulatory certainty.
Market dynamics are affected too. Nvidia’s ascent amplifies winner‑take‑most economics in semiconductors: a handful of companies that control proprietary designs, software ecosystems and data centre demand capture outsized share of production and profits. Other major chip buyers—Apple among them—remain important but may face tougher competition for cutting‑edge allocations, encouraging further vertical integration, multi‑sourcing or offshoring of selected capacity.
Huang’s comment is terse but telling: the AI boom is not only a software and datacentre phenomenon, it has fundamentally reordered hardware demand. For investors, industrial planners and governments, the new hierarchy between Nvidia and Apple at TSMC is a reminder that the next phase of technological competition will run through a narrow set of factories and the commercial decisions they make.