The artificial intelligence (AI) industry is experiencing unprecedented growth, fueled by unstoppable demand for increasingly sophisticated applications and services. But this technological gold rush is running into an unexpected obstacle: the shortage of 3 nanometer (nm) chips produced by TSMC, the Taiwanese semiconductor giant.
This shortage is putting a strain on the entire technology supply chain, prompting major industry players, including NVIDIA, Apple, Qualcomm, and AMD, to consider price increases for their AI-powered hardware products.
The 3nm gold rush
The production process a 3nm from TSMC has become the “Holy Grail” of the tech industry. It offers unprecedented performance and energy efficiency, essential to power the growing demands of AI, ranging from supercomputers to mobile devices. However, demand has far exceeded supply, so much so that TSMC’s entire production until 2026 has already been booked by the four tech giants, namely the aforementioned NVIDIA, Apple, Qualcomm and AMD.
Although TSMC has tripled its 3nm production capacity compared to last year, demand continues to grow at a dizzying pace. The AI sector, in particular, is absorbing a huge amount of these chips to power its next-generation accelerators, such as those used in data centers and cloud computing platforms. The smartphone market, with the imminent adoption of TSMC’s N3P node, will also help keep the pressure on production high.
The shadow of price increases
The shortage of 3nm chips is creating a domino effect throughout the supply chain. Hardware manufacturers, such as NVIDIA, Apple, Qualcomm and AMD, are competing for the limited quantities of available chips. This situation is pushing prices upwards, with the risk that additional costs will be passed on to end consumers.
Although TSMC has not yet officially announced price increases, the shortage of 3nm chips could force hardware makers to increase the costs of their products. This, in turn, could translate into higher prices for end consumers, who would find themselves paying more for smartphones, computers, game consoles and other devices equipped with AI technology.
TSMC is aware of the situation and is trying to address the shortage of 3nm chips by converting some of its production lines from 5nm to 3nm. The goal is to reach a monthly production of 180,000 wafers, but the arrival of new products, such as Intel Lunar Lake processors using TSMC chips, could put further pressure on the company’s production capacity.
In short, at the moment it is not yet clear whether and to what extent the shortage of 3nm chips will translate into price increases for consumers. However, indicators suggest that this is increasingly likely. The 3nm chip crisis further highlights the strategic importance of TSMC in the global technological ecosystem.
The Taiwanese company is the main semiconductor supplier to many of the world’s top technology companies, and its ability to meet growing demand for advanced chips is critical to the advancement of AI and other emerging technologies. For this reason, the “anti-China” plan, in itself, may not be enough to avoid disasters in the event of an invasion of Taiwan by Beijing.
