Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is dramatically ramping up spending and global expansion as an unprecedented surge in artificial intelligence demand stretches chip supply to its limits—cementing its industry lead even as executives warn shortages could persist for years.

Taiwan Semiconductor Steps Up Spending and Capacity Expansion

Taiwan Semiconductor plans to spend nearly $56 billion in 2026 to expand capacity, supported by strong demand from customers such as NVIDIA Corp. (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Apple Inc. (NASDAQ:AAPL), EE Times reported on Friday.

During the earnings call, CEO C.C. Wei underscored the long timelines required, saying, “It takes two to three years to build a new fab, no shortcuts,” and “It takes another one to two years to ramp it up.”

The company acknowledged it may still fall short of demand by 2027, prompting it to fast-track three 3-nm fabs across Taiwan, the U.S., and Japan.

Wei added, “We are now executing a global capacity plan to support the robust multi-year pipeline of demand for 3-nm technologies.”

Experts See Rising Competition but Clear Lead

Industry analysts say rivals are improving but still trail Taiwan Semiconductor.

Handel Jones of International Business Strategies stated, “Taiwan Semiconductor will continue to be the leader in technology and market share, but the performance of Samsung Electronics Co., Ltd. (OTC:SSNLF) has improved significantly,” noting Samsung’s scale and strong memory profits. He also said, “Samsung’s SF2P… is becoming competitive with N2.”

Sravan Kundojjala of SemiAnalysis highlighted the company’s advantage, stating, “Taiwan Semiconductor has a more-than five-year head start on N3/N2 yield that competitors cannot compress.”

Supply Risks and Pricing Strategy Shape Outlook

Analysts flagged ongoing supply constraints and evolving pricing dynamics. Jones warned of a widening supply-demand gap by 2030, while Kundojjala pointed to equipment limits, saying, “ASML Holding N.V.’s (NASDAQ:ASML) scarce EUV capacity now has multiple customers.”

Meanwhile, Futurum Equities’ Rolf Bulk said strong 2-nm demand will build gradually, with revenue contribution staying below 10% in the near term and margins potentially slipping in late 2026.

He added that Taiwan Semiconductor will likely introduce tiered pricing—charging AI-focused customers more than smartphone players—which could lift margins again in 2027.

Bulk also emphasized that the company’s central role in the AI ecosystem should help it secure critical materials despite geopolitical and supply chain risks.

TSM Price Action: Taiwan Semiconductor shares were up 0.63% at $368.55 during premarket trading on Tuesday, according to Benzinga Pro data.

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