A significant shift in client importance is underway at Taiwan Semiconductor Manufacturing Company (TSMC), signaling a fundamental change in the semiconductor industry’s growth drivers. For years, Apple was considered the premier customer and the primary influence on the chipmaker’s capacity expansion plans. The current landscape, however, is being redrawn by the explosive demand for artificial intelligence accelerators, propelling Nvidia into the lead role.
This transition raises critical questions about the direction of TSMC’s investment in cutting-edge manufacturing capabilities. The company’s latest and unusually high capital expenditure forecast is a direct response to this new reality.
Capital Allocation Mirrors AI Priority
During its quarterly conference on January 15, TSMC’s management presented a capital expenditure (CapEx) framework that captured market attention. The company plans to spend between $52 billion and $56 billion in 2026. For context, the reported figure for 2025 is approximately $41 billion.
The allocation of this budget is particularly noteworthy. An estimated 70–80% is earmarked for the most advanced process technologies, specifically 2-nanometer nodes and beyond. This manufacturing capability is essential for producing the next generation of AI chips both efficiently and at scale.
Nvidia Emerges as Top Revenue Contributor
Industry data and comments from Nvidia CEO Jensen Huang in late January indicate that Nvidia now accounts for the largest share of TSMC’s revenue. Analyst projections suggest that by 2026, Nvidia will contribute roughly $33 billion to TSMC’s top line, representing about 22% of total revenue. Apple is estimated to account for approximately 18% at that time.
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The central implication is clear: data center infrastructure is displacing consumer electronics as the semiconductor sector’s principal growth engine. The rhythm is now set by demand for AI hardware, rather than the upgrade cycles for iPhones and Macs.
Long-Term Growth Anchored in AI
Chairman C.C. Wei placed the “AI megatrend” at the forefront of the company’s strategy during the January 15 presentation. He outlined an ambitious target range: revenue from AI accelerators, or server AI processors, is projected to grow at a compound annual growth rate (CAGR) in the mid-to-high 50 percent range between 2024 and 2029.
Wei emphasized that AI demand is “real” and tangible, driven by major hyperscalers and high utilization rates from capacity bookings by key clients, including Nvidia and AMD.
This sets up a clear strategic dynamic. On one side, TSMC enjoys the long-term tailwind of the AI revolution. On the other, it faces the immediate and substantial costs of an expansion program of a magnitude that is critical to maintaining its leadership in manufacturing processes below 3nm.
Key Data Points:
– Nvidia projected to be TSMC’s largest revenue contributor by 2026
– 2026 CapEx outlook: $52 to $56 billion
– Focus: 70–80% of budget for advanced processes (2nm and below)
– AI accelerator growth outlook: Mid-to-high 50% CAGR (2024–2029)
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