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AI Chip Demand Chokes Tech Supply Chains
24 Mar
Summary
- TSMC faces capacity limits impacting AI chip supply.
- Supply constraints extend beyond chips to lasers and PCBs.
- Customers seek long-term supply agreements for 3-4 years.
Broadcom has identified significant supply chain constraints, directly attributing them to the immense demand for artificial intelligence chips. The company highlighted that TSMC, a primary manufacturer of advanced AI chips, is experiencing production capacity limitations.
These capacity limits at TSMC are projected to create a bottleneck in the supply chain through 2026, despite planned expansions. The issue is not confined to advanced chips alone, as Broadcom also noted supply constraints in other areas, including the laser components sector and printed circuit boards (PCBs).
Both Taiwanese and Chinese PCB suppliers are reportedly facing capacity issues, leading to extended delivery times. In response to these challenges, many tech companies are proactively entering into long-term supply agreements, some extending for three to four years, to ensure future capacity commitments. This trend is mirrored by other industry players, such as Samsung Electronics, which is also moving towards longer contract durations with its major customers.
