Taiwan Semiconductor Manufacturing Co. (TSMC) is currently operating at near-maximum production capacity as of March 28, 2026, as the global surge in artificial intelligence infrastructure continues to outpace semiconductor manufacturing capabilities. Industry data and official statements from key partners indicate that the foundry’s advanced nodes and packaging facilities are under extreme pressure, leading to a significant tightening of the broader technology supply chain.
Natarajan Ramachandran, Director of Product Marketing at Broadcom, recently confirmed that TSMC is hitting its production capacity limits, a shift from previous years when capacity was viewed as virtually unlimited. While TSMC is aggressively expanding its facilities with a target to reach 130,000 Chip-on-Wafer-on-Substrate (CoWoS) wafers per month by late 2026—nearly quadrupling its late 2024 output—the current ramp-up is failing to meet immediate demand. This mismatch has created a critical bottleneck that is expected to persist throughout the 2026 calendar year.
The supply constraints have expanded beyond silicon wafers to include essential peripheral components. Broadcom reported that printed circuit boards (PCBs) used in optical transceivers have become an unforeseen chokepoint, with lead times extending from the standard six weeks to approximately six months. Additionally, the laser segment, vital for high-speed data transmission in AI data centers, is facing severe supply limitations. These shortages are affecting the production of next-generation hardware, including Google’s TPU v7 and Nvidia’s Blackwell and Rubin architectures.
TSMC’s 3nm process remains the most constrained segment at the end of the first quarter of 2026. To manage this, TSMC is prioritizing AI and core clients, with Nvidia estimated to have secured roughly 60% of the total CoWoS allocation for the year. Google’s demand for its TPU v7 and early v8 chips is projected to reach 240,000 wafers in 2026, yet TSMC’s estimated delivery is capped between 150,000 and 180,000 wafers.
In response to these persistent shortages, a structural shift is occurring in how major technology firms secure capacity. Customers are increasingly moving away from quarterly or annual procurement cycles in favor of long-term agreements. Broadcom and Samsung Electronics have both noted a trend toward contracts lasting three to five years to ensure supply security. TSMC CEO C.C. Wei has emphasized that customer planning timelines now require engagement at least two to three years in advance. To address the shortfall, TSMC is accelerating the expansion of its Nanke AP8 plant and repurposing its Chiayi AP7 facility to focus on advanced CoWoS packaging.