Nvidia set to supplant Apple as TSMC's top customer, signaling chip industry's 'changing dynamic'

When Jensen Huang first met Morris Chang decades ago, he told the founder of Taiwan Semiconductor Manufacturing Company that one day Nvidia would be the chip foundry's biggest customer.

That's a story Huang, Nvidia's CEO, was asked about on a recent podcast, and it's a promise that is on track to be realized this year.

Nvidia will become TSMC's largest customer this year, according to analyst estimates and Huang himself. Apple is believed to currently be TSMC's largest customer, mostly to manufacture A-series chips for iPhones and M-series chips for PCs and servers.

The positional swap will mark a fundamental shift in the semiconductor industry, reflecting Nvidia's growing importance amid the AI infrastructure buildout.

On the podcast published this month, Huang said that switch has already happened.

"Morris will be happy to know Nvidia is TSMC's largest customer now," said Huang, adding that he was personally very happy about the milestone.

Creative Strategies chief analyst Ben Bajarin said he projects Nvidia to generate $33 billion in TSMC revenue this year, or about 22% of the chip foundry's total. Apple, by comparison, is projected to generate about $27 billion, or about 18% of TSMC's revenue.

"The scale of this drastically changed," Bajarin said. "A couple years ago, you could just see how much more capacity Nvidia was demanding from TSMC."

Nvidia and TSMC declined to comment. Apple didn't respond to a request for comment.

Apple reports first-quarter earnings on Thursday, and the company is forecasting as much as 12% revenue growth in the quarter.

TSMC doesn't discuss the ranking of its 522 customers, although it said in March that its top 10 customers made up 76% of the company's net revenue, adding that its largest customer at the time accounted for 22% of its net revenue. The second-largest customer accounted for 12% of net revenue.

Nvidia's impact is apparent in the chip foundry's financials.

TSMC's HPC sales, which include Nvidia's AI chips, made up 55% of net revenue in fourth-quarter earnings that were reported earlier this month. That was up from 40% in 2022, the year the AI boom kicked off with the launch of OpenAI's ChatGPT. AI accelerators, which are currently dominated by Nvidia, made up "high-teens" of TSMC's total 2025 sales.

Nvidia's sales are rising quickly and outpacing Apple's growth. In February, Nvidia is expected to report 66% growth to $213 billion in sales in its fiscal 2026, which ends this month. Apple's growth in its fiscal 2025, ended in September, was 6.4%.

Additionally, Nvidia's AI chips are bigger and more complicated to produce than what Apple manufactures, which means they cost more.

The shift also highlights TSMC's role as the largest contract supply foundry in the world, providing chip manufacturing and related services to nearly every processor maker, including Advanced Micro Devices, Intel, Broadcom and Qualcomm.

TSMC has an estimated 70% of the total market for chip manufacturing revenue, according to market researcher TrendForce. Although rival Intel has said it wants to make leading node chips in the U.S., it has yet to announce an anchor customer, and on Thursday, the company saw its stock plunge 13% after reporting soft first-quarter guidance and production concerns.

Huang understands the importance of TSMC's supply to Nvidia.

He visited Taiwan five times last year. In November, he attended the foundry's annual sports day while wearing the same red shirt as TSMC employees. On that trip, he also reportedly visited TSMC's fab equipped with the 3 nanometer technology used to produce Nvidia's Rubin chip, which is in full production and expected to ship later this year.

TSMC's latest quarterly results showed how the company's business is being transformed by the demand for AI chips. Company executives said they were weighing increased investment into additional factories, but were acting cautiously.

For the December quarter, TSMC reported $33.73 billion in net revenue, up 21% on an annual basis, and projected 30% growth in sales this year. The strong forecast is driven by TSMC's success in AI chips, which the company expects to grow at a "mid-to-high-fifties" compound growth rate through 2029.

"Our customers' customer, who are mainly the cloud service providers, are also providing strong signals and reaching out directly to request the capacity to support their business," TSMC CEO C.C. Wei said, according to a company transcript. "Thus, our conviction in the multi-year AI mega-trend remains strong."

TSMC said it planned to spend as much as $56 billion on capital expenditures this year and expects to increase that to capture AI demand, adding that investments made this year would come online in 2028. Still, the company remains conservative about long-term projections that can span five years into the future.

"I'm also very nervous about it, you bet," Wei said when asked about an AI bubble, according to the transcript. "Because we have to invest about $52 billion to $56 billion for the CapEx, right?"

TSMC and Apple have had a close relationship because of the volume of iPhone chips, which are smaller than AI GPUs and therefore less expensive per unit. The stability of that relationship allowed TSMC to aggressively invest in new capacity for cutting-edge technologies, which are called the "leading nodes."

Apple wanted the latest production nodes because the more advanced the manufacturing process, the more power-efficient the chip can be, improving device battery life. But power efficiency on the latest nodes is also important to Nvidia. That's because energy is an input into the return on investment on its AI systems.

"It just changes the dynamic where what was the driving force for TSMC — Apple — now shifts to Nvidia, and to some degree AMD, which is sort of the guarantee-scale customer that helps you justify the increase in CapEx to each new node," Bajarin said.

Apple will still need lots of chips from TSMC, but on the Taiwanese company's earnings call earlier this month, the only customer whose product names were mentioned was Nvidia.

"My customers, their product improvements continue to increase," Wei said. "It's well-known from Hopper to Blackwell to Rubin — that almost doubles, triples their performance."

Wei added that, from his point of view, the bottleneck in the AI industry remains "TSMC's wafer supply."