VELDHOVEN/HSINCHU, April 16 — Strong forecasts from ASML and the Taiwan Semiconductor Manufacturing Company (TSMC) this week point to another quarter of hefty spending by American cloud-computing giants as they race to secure advanced chips needed for their artificial intelligence (AI) build-outs.
The results suggest that demand stayed strong for AI chip designers such as Nvidia, Advanced Micro Devices, and Broadcom, all of which rely on TSMC, the world's dominant producer of cutting-edge processors.
Growing investor pressure on large technology companies such as Microsoft, Meta, and Amazon to deliver clearer returns on AI investment has raised doubts about how long the chip spending boom can last. Still, these companies are expected to spend over US$600 billion (RM2.37 trillion) on data centres this year.
"AI (demand) is so strong...Our customers, and customers of customers — who are mainly the cloud service providers — continue to provide us with their very strong signal and positive outlook," TSMC's chief executive officer (CEO) Che-Chia Wei said on an analyst call.
The company raised its annual revenue forecast on Thursday and said it was stepping up capital spending this year to meet demand for AI chips.
ASML, the world's largest supplier of chip-making tools, also lifted its annual revenue forecast on Wednesday.
"ASML's positive numbers generally paint a favourable picture for the semiconductor industry, even amid AI bubble concerns," said investment analysis platform Reflexivity's founder and president Giuseppe Sette.
While overall AI chip appetite remains strong, demand is increasingly shifting towards advanced processors required to run large language models or apply their training to answer questions, a process known as inference.
Capacity constraints limit growth potential
With demand for AI chips and equipment skyrocketing, the industry's heavy reliance on a handful of suppliers means chipmakers can only meet orders if they secure sufficient manufacturing capacity at those firms.
As a result, companies have taken to signing long-term agreements to secure capacity commitments for multiple years.
ASML CEO Christophe Fouquet said demand is set to outstrip supply for the foreseeable future, creating constraints across markets ranging from AI to smartphones and personal computers.
On Thursday, TSMC executives also pointed to tight production capacity, with the company working aggressively to expand its manufacturing capabilities to produce AI chips in mass quantities.
"Capacity is very tight, but we are working hard to make sure that we can meet customers' demand...we are stepping up our capex investment to increase our capacity," Wei said.
