Taiwan Semiconductor Manufacturing Company (TSMC) has significantly ramped up its 3-nanometer (3nm) chip production in Taiwan, increasing output to 160,000 wafers per month. This aggressive expansion directly responds to the "very strong demand" from NVIDIA for its advanced artificial intelligence (AI) chips, including the new Blackwell platform. NVIDIA, which recently achieved a $5 trillion market valuation, relies heavily on TSMC for manufacturing its cutting-edge processors that power the global AI revolution.^[1][2][3][4] ### AI Revolution Drives Unprecedented Chip Orders NVIDIA's dominance in the AI chip market continues to accelerate, with the company projecting its AI chip revenue to soar from $100 billion in 2024 to an estimated $262 billion by 2030. Analysts expect NVIDIA to maintain approximately 90% of the graphics processing unit (GPU) market.^[5] The company's latest Blackwell GPUs, which began shipping in the fourth quarter of 2024, are experiencing robust demand from major technology companies and cloud computing providers.^[6][7] NVIDIA's CEO, Jensen Huang, emphasized the critical partnership, stating, "Nvidia's success would not be possible without TSMC."^[1][4] NVIDIA's extensive backlog of chip orders now exceeds $500 billion, with demand extending through the end of 2026 and encompassing reservations for its upcoming Rubin processors.^[8] The Rubin platform is expected to leverage TSMC's advanced 3nm technology, specifically the N3P process, with a potential launch as early as the second half of 2025.^[9][10][11] NVIDIA is not only seeking wafers for its powerful GPUs but also for central processing units (CPUs), networking chips, and switches that are integral to its comprehensive AI hardware systems.^{[2][12][4][13]} ### TSMC's Massive Investment in Advanced Manufacturing In response to this booming demand, TSMC is making substantial investments in its advanced manufacturing capabilities. The company's capital expenditures for 2025 are projected to be between $38 billion and $42 billion, marking a significant 34% increase compared to 2024.^{[14][15][16][17]} Approximately 70% of this spending is allocated to advanced technology production, ensuring TSMC remains at the forefront of semiconductor innovation.^[15][17] TSMC was the first foundry to move its 3nm FinFET (N3) technology into high-volume production in 2022.^[18] Since then, it has introduced enhanced versions like N3E, which may have started production in 2023, along with other specialized processes such as N3P, N3S, N3X, N3C, and N3A.^[19][20][18] The demand for these advanced nodes is so high that TSMC's 3nm and 5nm fabrication facilities saw utilization rates exceed 100% in the first quarter of 2025.^[21] ### Expanding Capacity to Meet Global Needs TSMC's commitment to meeting NVIDIA's needs is evident in its aggressive capacity expansion. The company is currently engaged in building or planning ten global facilities for 2025, with seven of these advanced process fabs and packaging facilities located in Taiwan.^[22] This global expansion also includes projects in the United States, Japan, and Europe.^[22] In the U.S., TSMC's Arizona capacity is already fully booked through 2025 and 2026, with demand expected to continue into 2027.^[21] Beyond wafer production, TSMC is also dramatically increasing its advanced packaging capacity, particularly for Chip-on-Wafer-on-Substrate (CoWoS) technology. This specialized packaging is crucial for integrating multiple chips into NVIDIA's high-performance AI accelerators. TSMC's total CoWoS capacity is projected to increase by 150% in 2024 and by over 70% in 2025.^[23][24][25] By the end of 2024, the estimated monthly CoWoS capacity is expected to reach nearly 40,000 units.^[23][25] NVIDIA's demand alone is anticipated to account for more than half of this expanded capacity.^[23][24] ### Broader Market Impact and Future Outlook The surging demand for AI chips has significantly boosted TSMC's financial performance. In the third quarter of 2025, the company's revenues jumped 41% year-over-year to $33.1 billion. Its 3nm and 5nm nodes collectively contributed 60% of TSMC's total wafer sales.^[17] Consequently, TSMC has raised its revenue growth forecast for the full year 2025 to a mid-30% range.^[2][26][17] The entire AI chip market is projected to expand from $117 billion in 2024 to $334 billion by 2030, driven by continuous investments from major tech giants like Microsoft, Amazon, Google, Meta, and Oracle.^[5][7][8] Memory suppliers such as SK Hynix, Samsung, and Micron are also scaling their production to support NVIDIA's growing needs for high-bandwidth memory (HBM).^[1][4][13] Despite geopolitical factors and U.S. export restrictions that prevent NVIDIA from selling its advanced Blackwell chips to China, the demand for AI infrastructure remains exceptionally strong.^{[1][12][4][13]} TSMC's strategic investments and capacity expansions solidify its crucial role in powering the ongoing artificial intelligence boom.