Apple has long held a kind of “favored nation” status with its chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), receiving preferred treatment for its chip needs. However, thanks to surging demand for artificial intelligence, the iPhone maker may soon have to get in line with the rest of the riff-raff.
According to a report published on semiconductor analyst Tim Culpan on his blog Culpium, TSMC is no longer granting Apple preferred status to its leading-edge manufacturing capacity. Apple is now competing with TSMC’s AI-focused customers such as Nvidia and AMD for supply, particularly when it comes to the most advanced process nodes.
According to Culpium’s analysis and discussions with sources in the supply chain, Nvidia likely took top spot on the chipmaker’s at least one or two quarters of last year. “We don’t discuss that,” TSMC’s Chief Financial Officer Wendell Huang told Culpium Thursday when asked about the change in client rankings.
Apple apparently ceased to be the primary driver of TSMC’s revenue growth about five years ago. Since AI accelerators consume substantially more wafer area per unit than the smartphone, tablet, and computer system-on-a-chips used by Apple, AI customers are grabbing a massive share of the chip foundry’s advanced manufacturing output. This has resulted in Apple’s chip needs no longer being automatically shoved to the front of the line across TSMC’s two dozen fabrication plants.
According to the report, it’s likely that Nvidia surpassed Apple as TSMC’s largest customer by revenue for at least one, maybe two quarters in 2025, although the exact numbers are not known.
The change in preference will likely mean Apple will be paying more for its future chip needs, as it will be forced to compete with AI companies that are willing to pay through the nose for priority access to the latest chip fabrication processes. While this won’t likely cause Apple to be unable to ship product in the future, it will influence the company’s pricing margins and strategies in the near future.