TSMC capacity bottleneck hits AI chip supply in 2026, Says Broadcom

Broadcom said tight manufacturing capacity at Taiwan Semiconductor Manufacturing Company (TSMC) has become a bottleneck for the AI chip supply chain in 2026, as demand for data center infrastructure tied to generative AI workloads continues to rise, according to Reuters.

Natarajan Ramachandran, Director of Product Marketing in Broadcom’s Physical Layer Products division, said TSMC was “hitting production capacity limits.” He said the company is expanding capacity through 2027, but current constraints have already tightened supply conditions this year.

TSMC, the world’s largest contract chipmaker and a key supplier to NVIDIA and Apple, had earlier said its advanced manufacturing capacity at leading nodes used for AI chips remains tight. The company said it is working to narrow the gap between supply and demand.

The constraints extend beyond semiconductor fabrication. Ramachandran said shortages are emerging across optical components used in high-speed data transmission inside AI data centers, with supply in the laser segment remaining limited.

Printed circuit boards (PCBs), a core component in servers and networking hardware, have also become a constraint. Ramachandran said lead times for certain PCBs used in optical transceivers have increased from about six weeks to six months, as suppliers in Taiwan and China face capacity limits. These boards are used to connect high-speed networking and compute components in AI systems.

Broadcom, which supplies networking chips and custom silicon used in AI systems, has reported growing demand tied to data center deployments. The company said AI-related revenue continues to increase, driven by hyperscale customers building out AI infrastructure.

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The supply environment is also shifting how customers secure components. Ramachandran said companies are entering long-term agreements with suppliers, locking in capacity commitments for three to four years to manage supply risk.

TSMC is expanding manufacturing capacity across multiple regions, including new facilities in the United States, with additional output expected to come online through 2026 and 2027.

Ramachandran said he does not expect the constraints to persist indefinitely, citing planned capacity additions and new suppliers entering the market.