For many years, Apple remained not only TSMC’s largest but also its preferred customer, which allowed it to secure not just the most favorable pricing but also priority access to leading-edge technologies. Now, in terms of order volumes, Nvidia is moving into the top spot, while Apple will settle for second place.
This is the belief of the author of the Culpium blog, who possesses many years of experience at Bloomberg and extensive connections within the semiconductor industry. TSMC’s Chief Financial Officer, Wendell Huang, declined to comment on the company’s client relationships, but the publication’s author asserts that even the revenue dynamics of Nvidia and Apple over recent years suggest the former will overtake the latter. According to the source, even if Nvidia did not surpass Apple in its share of TSMC’s revenue in one or two quarters last year, it will inevitably achieve this in the current year.
TSMC’s own revenue, as was recently disclosed, grew by 36% to a record $122 billion for the fiscal year 2025. Nvidia’s revenue for the comparable period is projected to have surged by 62%, while Apple’s increase was at most 3.6%. Moreover, of the $122 billion TSMC earned last year, approximately 58% came from the high-performance computing segment. Apple still derives about half of its revenue from smartphone sales, and components for these devices accounted for only 29% of TSMC’s revenue, and it is evident that Apple is not the sole smartphone supplier with a dominant market position. In the HPC segment, Nvidia’s position is exceptionally strong, making the impact of its orders on TSMC’s business quite clear.
The source claims that Apple lost its status as TSMC’s main revenue growth driver five years ago. While the artificial intelligence boom is driving up demand for Nvidia’s accelerators—chips manufactured by TSMC—the smartphone segment has seen, if not stagnation, then only very modest development for several years running. TSMC’s revenue in the HPC segment rose by 48% last year and by 58% the year before. The smartphone segment in TSMC’s business posted an 11% revenue increase last year, having grown by a more robust 23% the year prior. This trend is unlikely to change significantly this year.
TSMC itself anticipates increasing its revenue by about 30% this year, and this growth will hardly be fueled by the smartphone segment, which accounts for roughly 50% of Apple’s revenue. TSMC’s long-term forecast suggests that its total revenue will grow by an average of 25% annually until 2029, with the AI segment seeing a minimum average annual growth of 55%. Last quarter, no less importantly, TSMC’s profit margin rose to an impressive 62.3%, a level generally uncharacteristic for a contract chip manufacturer.
The structure of demand for TSMC’s services from Apple and Nvidia is heterogeneous. While Apple is interested in obtaining a wider range of processors, the majority of which are made using the most advanced available technology, volume is what matters to Nvidia, and it generally does not seek the most advanced lithography. TSMC typically constructs a separate facility to implement new technology, rather than refitting older ones. This allows for continuous product supply to customers. Since Apple’s products are more diverse in nature, TSMC manufactures them on a greater number of its sites, whereas a more limited set of production facilities serves Nvidia. TSMC’s management appears worried by the increasing reliance on Nvidia and the overall AI boom, as could be gathered from their comments this week. Nevertheless, the company is starting another year by announcing intentions to raise capital expenditures to a record $56 billion. Nvidia’s profitability will allow it to write off excess inventory relatively easily in case of a sudden drop in demand. In this regard, TSMC assumes far greater risk than its main client. However, when demand rises, it also profits considerably.
About the Author
