TSMC says 20 new fabs still can’t meet AI chip demand

TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 1.20%, the world's largest contract chipmaker, disclosed this week that it is simultaneously constructing about 20 fabrication plants worldwide but still cannot keep pace with demand driven by artificial intelligence. The remarks, made at a CEO summit during SEMICON Taiwan 2026 in Taipei, underscore the scale of the capacity crunch facing the global chip industry.

Demand Unseen in Three Decades

Y.C. Hou, a senior vice president at TSMC and chairman of the Taiwan Semiconductor Industry Association, said the chip industry is experiencing a surge in demand not seen in 30 years, with equipment purchase demand in July rising 1.9 times from the end of last year. TSMC is building 13 fabs in Taiwan and has broken ground on five to six overseas sites, bringing the total to about 20 plants under simultaneous construction — a scale roughly five times larger than past buildouts.sedaily

Yet demand still outpaces capacity. Hou pointed to a severe shortage of construction workers as the biggest obstacle, saying both Taiwan and the United States face the problem. He added that the company is deploying AI on production lines to improve capacity and prevent leaks of technological secrets.sedaily

SK Group Chairman Chey Tae-won echoed the concern in an interview with Japan's Asahi Shimbun, saying memory chips for data centers are 20 to 30 percent short of demand and that investments underway in South Korea alone cannot close the gap. Chey, who has warned repeatedly that global chip shortages could persist through 2030, said SK is weighing investments in Japan, including cooperation with Kioxia, and would present concrete plans by year-end.reuters+1

Kaohsiung Emerges as Packaging Hub

Separately, TSMC announced plans to establish a presence in Kaohsiung's Baipu Industrial Park to accelerate testing and validation of semiconductor materials and equipment. Vice President Jun He said the company is developing a three-hectare site with modular cleanrooms and laboratories, and expects the facility to improve validation efficiency by 25 to 50 percent. TSMC expects its chip-on-wafer-on-substrate advanced packaging capacity to grow at a compound annual growth rate of more than 80 percent through 2027.taipeitimes+1

A $300 Billion Industry Under Strain

Taiwan Semiconductor Industry Association president Wu Chih-i said Taiwan's semiconductor revenue is projected to reach nearly $300 billion this year, representing more than 40 percent growth over last year. SEMI president and CEO Ajit Manocha said global semiconductor revenue could reach $2 trillion by 2030, but cautioned the path would not be "a straight line".taipeitimes

"We're going to have to learn how to deal with and navigate through the new opportunities and new headwinds," Manocha said.taipeitimes