NVIDIA's CEO Jensen Huang and AMD's Lisa Su have recently spoken about how putting their trust in TSMC as a foundry partner was a bet that is now paying off.
NVIDIA/AMD Putting Their Trust in TSMC a Few Years Ago Was a Bet That Sounded Irrational Back Then
In the modern-day AI industry, chips are becoming a major bottleneck, mainly because the entire supply chain is constrained. But for TSMC, the world's largest foundry, satisfying customer orders has become increasingly complex, and adding new clients, given the company's tendency to show "loyalty" to existing clients like NVIDIA and AMD. If we define loyalty in a broader sense, it includes early access to production lines, faster delivery, and close collaboration in developing IP technology. TSMC's behaviour towards customers isn't defined solely by the revenue it brings in; rather, it is about the companies that were there before TSMC became mainstream.
There's no doubt that TSMC values customer relations, and one of the prime examples of this is how the firm implements price hikes gradually and sustainably rather than aggressively. However, if we look at the company's "humble origins", you'll realize that TSMC entered an era that was being dominated by the likes of Intel, Texas Instruments, NEC, and many others. Building the foundry from ground zero, led by Morris Chang and others, wasn't easy, but throughout the journey, one will realize that TSMC has honored customers above all else.
The reason for building this context is that, just recently, during a podcast interview with Jodi Shelton, NVIDIA's CEO, Jensen Huang recounts how he had promised Morris Chang that Team Green would be TSMC's largest customer, despite setbacks with processes like 28nm. Here's what Jensen specifically said at the podcast:
Jodi Shelton: I remember Morris Chang has a similar story when he first met you, that you immediately said, "I’m going to be your biggest customer or one of your biggest customers. And he’s like, ‘Wow, that’s a lot of gumption." So, where did that confidence come from at such an early age?”
Jensen Huang: By the way, Morris will be happy to know Nvidia is TSMC’s largest customer now.
Putting aside the HPC/AI hype, one of the primary reasons NVIDIA exists as a $5 trillion entity in the first place is its close relations with the likes of TSMC, which have given NVIDIA an "exclusive" status. Team Green is known to be the only customer of the A16 process, and according to reports, Jensen already has sufficient chip supply from TSMC, credited to long-term contracts. Yet again, this is another example of how prioritizing relations over financial goals benefits in the long term, as it has for NVIDIA.
Not just NVIDIA, but AMD also made a massive bet by switching to TSMC, especially since the company had its own fab network, which later spun out as GlobalFoundries. Speaking with Jodi Shelton, AMD's CEO Lisa Su did reveal that putting their trust in TSMC was "one of the major decisions" made under her leadership, and by the looks of it, this eventually turned out to be a huge win for AMD, in terms of gaining client and server market share.
When you look at AMD's arch-rival Intel, the company has long struggled with its internal foundry operations, which is one of the major reasons clients' products haven't performed as expected, and it, too, is reliant on TSMC.
Another major call was deciding you know, really to, you know, change fundamentally our our relationship with Global Foundaries and, you know, go with, you know, TSMC as our leading manufacturing partner.
- AMD's CEO Lisa Su
We all know the value of TSMC in the AI supply chain, and it is the largest entity in the supply chain, along with manufacturers like NVIDIA/AMD. And given the company's history with its partners, this is a major reason firms tend to stick with TSMC as their primary foundry, despite Intel's alternatives proving compelling. It won't be wrong to say that without TSMC, neither NVIDIA nor AMD would have reached their current milestones in AI and compute.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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