Record Demand for 3nm and 5nm
Taiwan Semiconductor Manufacturing Company (TSMC) is experiencing record demand for its 3nm and 5nm manufacturing nodes as latest reports from industry outlets indicate. Production lines are already operating at high load, and the first half of next year is forecast to approach near-100% utilization. The surge is driven by a strong push from artificial intelligence deployments, as well as the ongoing need for high-performance chips from leading tech companies.
The 3nm node, including the refined N3P variant, is central to next-generation flagship devices, while 5nm remains a critical workhorse for mid-to-high-end smartphones and HPC solutions. Analysts point to AI acceleration as a key driver—demand for advanced chips that can handle complex inference tasks continues to outpace supply.
Key Customers and Node Allocation
Among the most important customers are mobile SoC vendors and high-performance computing developers. In the mobile space, 3nm N3P is being utilized in upcoming flagship chips such as Apple’s A-series successors and the M-series processors. Other major players, including MediaTek and Qualcomm, have integrated this node into modern mobile solutions, with Qualcomm’s Snapdragon X2 Elite signaling ambitions for PC-class performance on mobile platforms.
In the AI accelerator segment, TSMC is manufacturing 3nm chips for notable solutions like NVIDIA Rubin and AMD Instinct MI355X. This tight concentration of orders underscores both the quality and throughput of TSMC’s 3nm process, while contributing to a broader wafer supply challenge as demand accelerates across sectors.
Additionally, there are indications that Apple has reserved a substantial portion of future capacity on the next-gen 2nm process, signaling a multi-year procurement strategy designed to secure access to cutting-edge resources. This kind of pre-reservation by a major customer highlights the strategic importance of supply chain visibility in the coming years.
Production, Costs, and Capacity Expansion
With wafer constraints and high utilization across advanced nodes, there is growing talk of price adjustments for leading-edge processes. TSMC may look to balance demand with pricing and capacity expansions. Possible moves include accelerating N3 production and expanding manufacturing capacity, potentially including new facilities in the United States—such as a Zend-style expansion in Arizona—to bring production closer to key markets. Any such expansion would require significant investment and regulatory clearances, but it would help diversify geographic risk and bolster supply security for customers with urgent AI and compute needs.
Five-Nanometer Demand and Broader Impacts
Even as 3nm volumes rise, 5nm demand remains robust, further stressing existing capacity. The node continues to power a wide range of devices and accelerators, and competition for mature nodes persists as OEMs pursue increasingly capable AI-enabled chips. The global semiconductor supply chain remains heavily dependent on TSMC’s Taiwan facilities, a reality that has spurred policy focus in the United States and other regions toward onshore and regionalized production to improve resilience.
Outlook
Industry observers expect the demand surge for 3nm and 5nm to persist through the mid-2020s as AI workloads grow and consumer devices demand higher performance per watt. TSMC’s ability to manage multi-node production, maintain price discipline, and pursue selective capacity expansion will shape not only its own business trajectory but also the broader ecosystem of AI hardware. While geopolitical and regulatory factors present risks, the near-term outlook points to continued strong demand for these cutting-edge processes and a drive to expand manufacturing footprint beyond Taiwan to mitigate supply risks.
