AI Chipmaking Bottleneck

The chipmaking process for artificial intelligence is poised to face a new bottleneck, as advanced packaging capacity in Asia becomes a limiting factor. Taiwan Semiconductor Manufacturing Co. is preparing to break ground on two new plants in Arizona, but capacity is still in short supply. The bottleneck is emerging as Nvidia reserves a majority of the most advanced capacity available at TSMC, leaving other companies to scramble for remaining capacity. Intel is technologically on par with TSMC, but has struggled to solidify a major external customer for its chip fabrication business. The shortage of advanced packaging capacity could become a major constraint on the growth of AI. A key date to watch is the expected completion of TSMC's new plants in Arizona, which could help alleviate the capacity shortage. However, until then, the bottleneck is likely to remain a major challenge for AI companies, and investors should watch for signs of how this constraint will impact the industry's growth.