TSMC is the world's most important contract chip foundry in the world as it builds chips for some of the most influential fabless chip designers in the world. By "fabless," we mean that these companies don't have the production facilities (known as fabs-short for fabrication facilities) to build their chips thus making them "fabless." You're probably familiar with many of these companies including Apple, Qualcomm, Nvidia, AMD, MediaTek, and Broadcom.
TSMC's big name clients like Apple and Nvidia account for most of TSMC's advanced process capacity
TSMC has no trouble getting orders. For the third quarter of 2025, TSMC reported revenue of $33.1 billion which indicates that the foundry is shipping plenty of chips. But C.C. Wei, CEO of TSMC, says that overall, chip demand is well ahead of chip supply. Wei says that based on what he sees currently, TSMC's demand for chips is three-times higher than the amount that TSMC can fulfill at the moment. This is not good because it means that any slight problem could lead to the foundry facing a chip production bottleneck that could sharply reduce the availability of popular tech products that are powered with TSMC-built semiconductors.
TSMC CEO C.C. Wei. | Image credit-TSMC
Chips made using advanced processes such as 5nm, 3nm and 2nm have even a greater production shortfall at TSMC leading Wei to note that TSMC's production of these chips at current numbers is massively insufficient. Those TSMC customers lucky to have a long-term contract, like those we named at the end of the first paragraph, might not have as much to worry about as other firms do. Prospective TSMC clients sans a contract could be forced to wait a long time for production capacity to open up allowing their chips to be built.
Strong demand for AI chips from Nvdia, for example, probably leaves little to no room for TSMC to accept many uncontracted orders for production using advanced process nodes. Those turned away can run to Samsung Foundry although there are some reasons why TSMC had 70.2% of the contract semiconductor foundry market during the second quarter this year. Samsung's 7.3% share put it a distant second behind TSMC. China's largest foundry, SMIC, was third with 5.1% of the market.
Will Samsung Foundry benefit from TSMC's success?
Yes. Samsung's yields are improving.
81.82%
No. TSMC will continue to be favored.
18.18%
Samsung Foundry's poor yields have kept some chip designers away. You might remember that Samsung Foundry's poor yields led Qualcomm to pull production of the Snapdragon 8 Gen 1 from the foundry. After revising the specs a bit, Qualcomm had TSMC produce the Snapdragon 8+ Gen 1; Qualcomm has stayed with TSMC ever since.
Will customers feel comfortable using Samsung Foundry to cover their chip-production needs?
The yield is the percentage of non-defective, functional chips sliced from a silicon wafer compared to the maximum number that could have been built from that wafer. Last year Samsung was forced to spend $400 million to buy additional Snapdragon 8 Elite application processors (APs). The money had to be coughed up when it became apparent that Samsung Foundry's low yield on 3nm production meant that not enough Exynos 2500 APs could be bult in time for the 2025 flagship Galaxy S25 series. Now, with Samsung Foundry's yield up, the capable Deca-core Exynos 2600 AP is expected to be deployed on the Galaxy S26 and Galaxy S26+ in certain regions.
The big question is whether the current capacity shortage creates such desperation for some manufacturers that they are willing to take their chances with another foundry instead of TSMC. After all, the fact that TSMC is overwhelmed with orders can't be a coincidence. However, this current set of circumstances could be just what the doctor ordered for Samsung Foundry. And with the early word on the Exynos 2600 AP being positive, the start of a Samsung Foundry turnaround could be at hand.
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Building a 2nm fab costs approximately $28 billion and it takes three to five years to complete. Correcting TSMC's chip shortage isn't something that can be done quickly which means that it will probably take years for the foundry to add capacity. Can Samsung Foundry step up and take advantage of this situation?
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Alan, an ardent smartphone enthusiast and a veteran writer at PhoneArena since 2009, has witnessed and chronicled the transformative years of mobile technology. Owning iconic phones from the original iPhone to the iPhone 15 Pro Max, he has seen smartphones evolve into a global phenomenon. Beyond smartphones, Alan has covered the emergence of tablets, smartwatches, and smart speakers.
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