The growing momentum in artificial intelligence (AI) applications is significantly influencing the global semiconductor supply ecosystem, evidenced by Nvidia Corporation’s (NASDAQ: NVDA) recent rise to become the top customer of Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) (NYSE: TSM).
This development was publicly confirmed for the first time by Nvidia's CEO, Jensen Huang, during a recent podcast interview. Huang noted that Nvidia has now assumed the position as TSMC's largest client, a milestone he implied would resonate well with TSMC's founder, Morris Chang.
During the podcast, the host, Jodi Shelton, recounted an anecdote Mr. Chang shared from their initial meeting, highlighting how Huang confidently predicted Nvidia’s eventual status as one of TSMC’s principal customers. This forecast has come to fruition amid the rapid expansion of the AI market, which has recalibrated industry priorities.
According to the report, Nvidia’s business now constitutes approximately 13% of TSMC’s total revenue. This surpasses Apple Inc. (NASDAQ: AAPL), which had maintained the leading customer role throughout the 2010s following its strategy of outsourcing the manufacturing of its iPhone and iPad processors to TSMC.
Nvidia’s previous tenure as TSMC’s largest client dates back to the early 2000s, illustrating a notable shift in customer rankings within the semiconductor fabricator’s portfolio over two decades.
The report also elaborates that Apple continues to secure significant manufacturing resources from TSMC, reportedly obtaining close to 50% of the company's capacity for 2-nanometer process technology. This allocation is intended for the production of upcoming A20 and A20 Pro chips designed for Apple's future smartphone models.
Analyst Projections Foresee Continued AI-Driven Demand Favoring Nvidia
Nvidia’s ascent comes as the company became the first to surpass a market capitalization of $4.5 trillion in October, bolstered by AI investments from major technology firms such as Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOGL), and Amazon.com Inc. (NASDAQ: AMZN).
JPMorgan analyst Harlan Sur emphasized that demand fueled by AI advancements will likely sustain Nvidia’s momentum as the semiconductor sector approaches the fourth quarter of 2025 and extends into 2026. Sur attributes Nvidia’s market strength to ongoing and substantial spending in AI infrastructure.
The analyst estimates that the AI accelerator market is poised to reach approximately $200 billion in 2025, creating considerable opportunities for companies like Nvidia, which holds a central position in accelerated computing operations.
Within this context, Sur continues to identify Nvidia as a top investment choice given its core role and expanding influence in the AI computing space.
Recent Market Performance
Reflective of these developments, Nvidia’s shares experienced a modest increase of 0.82%, trading at $184.83 during premarket sessions on Thursday, according to Benzinga Pro data. In parallel, TSMC’s stock appreciated by 1.63%.
This stock movement underscores investor recognition of the shifting dynamics in semiconductor manufacturing and client contributions.
Summary
- Nvidia has become TSMC’s largest customer, surpassing Apple, driven by AI-related demand.
- Nvidia accounts for roughly 13% of TSMC's total revenue, reflecting significant client reordering.
- Apple maintains substantial manufacturing presence with half of TSMC’s 2-nanometer capacity reserved for its upcoming chips.
- Analysts project Nvidia’s leadership in AI semiconductor demand to persist into 2026.
Key Points
- The AI market surge has realigned customer dominance at TSMC, directly impacting revenue distribution.
- Nvidia’s historic rise mirrors strategic positioning in accelerated computing and GPU technology.
- Large technology companies are activating massive investment cycles in AI infrastructure, increasing demand for specialized chips.
- TSMC continues to serve as the semiconductor manufacturing backbone for leading global technology firms, adapting client portfolios accordingly.
Risks and Uncertainties
- The semiconductor industry remains sensitive to technological shifts that could alter client demands unexpectedly.
- Capacity constraints, such as limited 2-nanometer process availability, impose operational challenges and allocation competition among top clients.
- Prolonged reliance on a few major customers could expose TSMC to concentration risk if demand dynamics change.
- Market valuations and expectations for Nvidia’s AI-driven expansion incorporate assumptions that may not materialize fully if industry trends adjust.