AMD expert: CPU/ GPU/ ARM competition/ TSMC capacity
Short-Term Capacity Relies on Optimization; Long-Term Eyes 2027: TSMC’s physical capacity expansion requires 1 to 2 years, meaning no substantial growth is expected before 2027. Currently, the supply gap is mainly mitigated by improving 3nm yields (expected to boost production by 5%) and flexibly deploying 4nm product lines.
Significant Upward Revision for 2026 Shipment Outlook: Driven by a strong start in Q1, the company has significantly raised its 2026 server CPU shipment growth forecast from 18% to 35%.
Seeking Samsung as a Backup Foundry: In March 2026, the company visited Samsung to negotiate HBM4 supply and 2nm–4nm foundry services. However, Samsung’s advanced process yields are currently too low to support mass production.
Lower Priority in TSMC’s Advanced Process Allocation: In the fierce competition for TSMC’s capacity, the company ranks third in 3nm allocation (behind NVIDIA and Broadcom) and fourth in 2nm allocation (launching in 2H 2026, behind Apple, Qualcomm, and MediaTek).
Server CPU Prices Remain Firmly High: In Q1 2026, the average selling price (ASP) for server CPUs increased by 10–15% year-over-year (YoY), with unit prices exceeding $3,000. Q2 prices are expected to remain flat quarter-on-quarter (QoQ).
X86 Market Share Eroded But Remains Solid: The ARM server market share is projected to rise from 12.5% in 2025 to nearly 20% by the end of 2026 (and reach 40% by 2030). Nevertheless, X86 maintains an irreplaceable position in enterprise AI and traditional heavy-workload domains.
X86 Dominates High-Compute, Heavy-Workload Cores: Facing competition from ARM, X86 remains irreplaceable in high-performance computing (HPC) and 8K animation rendering, thanks to its 5GHz+ high-frequency single-core performance and robust complex-computing capabilities.
Strong AI Chip Demand with No Quarterly Price Surges: The compound annual growth rate (CAGR) for AI chip demand is at least 30%. Despite a long-term supply-demand mismatch, industry giants will not hike prices on a quarterly basis to safeguard downstream margins. Currently, the B2B market remains resilient, while B2C channel demand has slowed down.
Launching Interconnect New Products in 2H to Counter Competition: The company will introduce Helios (competing with NVLink) and MI-Link 7.2 in the second half of 2026, offering integrated solutions with fixed CPU-to-GPU ratios.
Pioneering “Split Packaging” to Boost Market Share: To bypass wafer constraints, the company has adopted a flexible packaging strategy. Large-core products (e.g., 192-core) are split and packaged into multiple smaller-core units (e.g., three 64-core units) to drive up shipment volumes and market share.
Below is details: (2,500 words in total)
How will the company plan to resolve CPU capacity issues to meet the increasing demand for CPU usage in the market? Will you consider introducing capacity from other foundries like Samsung?
The capacity supply issue can be viewed from several perspectives.
TSMC’s Current Framework: First, within TSMC’s existing capacity framework, although the total volume of wafer tape-outs is relatively fixed—for example, the 3nm monthly capacity is around 170,000 wafers—there is still room to increase output by improving yield rates, which is expected to bring a progressive increment of about 5%.
Product Portfolio Adjustments: Second, the product portfolio provides room for adjustment. For instance, the 9005 series utilizes both 3nm and 4nm processes simultaneously. In Q1 2026, market demand for 4nm process products was robust. Since there was less competition for this portion of capacity, the company managed to over-produce, boosting the proportion of the channel business by 45% compared to 2025.
TSMC’s own physical expansion cycle is quite long, typically requiring 1–2 years, meaning that any order-of-magnitude changes in its capacity might not materialize until 2027. The trend of CPU utilization catching up with GPUs is clear, but it is a gradual process. It is estimated that by 2027 to 2028, the ratio of CPUs to GPUs could reach 1:2, and potentially approach 1:1 by 2030.
To expand capacity, the company is indeed considering other options. In March 2026, senior management visited Samsung to primarily discuss cooperation in two areas:
HBM4 Supply: This aims to supplement HBM resources for products like the MI455X, as HBM supply has become another critical bottleneck following CoWoS packaging capacity.
Foundry Possibilities: They explored foundry options for 2nm to 4nm nodes, with a specific focus on 2nm. However, Samsung’s current yields on these advanced nodes are low and do not yet meet the requirements for large-scale mass production.
What is the company’s current standing within TSMC’s advanced process wafer capacity? What is the competitive landscape like across different process nodes?
3nm Process: The company ranks behind NVIDIA and Broadcom in TSMC’s capacity allocation. This allocation ratio is quite similar to the landscape seen in CoWoS capacity.
2nm Process: For the upcoming 2nm process, set to launch in the second half of 2026, the competitive landscape differs. The company faces priority capacity competition from mobile clients such as Apple, Qualcomm, and MediaTek, placing it fourth in line. Because initial wafer output for the 2nm process will be limited, its introduction will only partially alleviate existing capacity pressures, and product pricing will consequently be higher.
Considering that incremental CPU demand in the AI space may be increasingly captured by the ARM architecture, alongside the company’s own product roadmap, what kind of growth trajectory do you expect for server CPU shipments in 2027?
The growth outlook for 2027 needs to be evaluated in conjunction with structural changes in the market.
First, the x86 architecture still maintains a dominant position in the global server market. According to IDC metrics, the ARM architecture accounted for roughly 12.5% in 2025. With the top four cloud service providers (CSPs) ramping up investment in AI infrastructure, and the introduction of products like NVIDIA’s Grace Hopper and Vera Rubin, ARM’s share is expected to approach 20% by the end of 2026. This trend aligns with the shift in AI workloads from training to inference, with some forecasts predicting that ARM’s market share could reach 40% by 2030.
Despite ARM’s expanding share in the incremental AI market, the x86 architecture still has its designated application scenarios:
The typical ratio of ARM to GPUs is 1:2.
Under the x86 architecture, particularly in enterprise AI applications, the CPU-to-GPU ratio is generally no lower than 1:4.
The company will launch Helios and MI-Link 7.2 (similar to NVIDIA’s NVLink) in the second half of 2026 to provide a total solution. In such bundled packages, the ratio of CPUs to GPUs is relatively fixed.
Based on this backdrop, the company remains optimistic about server CPU shipment growth. At the end of 2025, the growth forecast for 2026 was set at 18%, but following the conclusion of Q1 performance, the full-year shipment growth expectation for 2026 has been revised upward to 35%. Looking ahead to 2027, with the addition of TSMC’s new production lines and the potential introduction of Samsung’s capacity, the shipment growth rate will depend heavily on how capacity materializes in Q3 2026. Furthermore, by utilizing flexible packaging strategies—such as packaging a 192-core product into multiple 64-core dies—the company can effectively boost shipment numbers and capture market share.