Summary of TSMC and AI Supply Chain Conference Call Industry Overview - The conference call focuses on the semiconductor industry, particularly TSMC's role in the AI supply chain and its capacity expansion plans for 3nm wafers in response to increasing demand from major AI customers like Nvidia and AMD [1][2][11]. Key Points and Arguments TSMC's Capacity Expansion - TSMC is considering expanding its 3nm wafer capacity by an additional 20,000 wafers per month (kwpm) in Taiwan, which could increase its 2026 capital expenditure (capex) to between US$48 billion and US$50 billion, up from the previously expected US$43 billion [3][12]. - The expansion is driven by strong demand from major customers, particularly Nvidia, which has indicated a need for more capacity during a recent visit by its CEO [2][11]. Constraints and Challenges - The main constraint for TSMC's expansion is the availability of clean room space, as all new clean room facilities are allocated for 2nm expansion. TSMC may relocate some 22nm/28nm production from Fab 15 to free up space for 3nm expansion [3][12]. - There is a noted shortage of 3nm wafers, which has affected several customers, including Nvidia, AMD, and Alchip [11]. CoWoS Capacity and Demand - TSMC's CoWoS (Chip on Wafer on Substrate) capacity is expected to be sufficient to meet the projected demand from Nvidia's Rubin chips, despite concerns about potential bottlenecks in front-end capacity and materials like T-glass [4][18]. - The analysis indicates that the total implied CoWoS consumption for TSMC could reach 629,000 wafers, with significant contributions from partnerships with OpenAI and AMD [21]. Stock Implications - The potential increase in 3nm capex is viewed positively for global semiconductor capital sentiment. Morgan Stanley maintains an "Overweight" rating on TSMC and other related companies, anticipating better growth in AI semiconductors [6]. Customer Demand Breakdown - The demand for TSMC's 3nm node is projected to grow significantly, with estimates of 110-120 kwpm in 2025 and 140-150 kwpm in 2026, potentially reaching 160-170 kwpm with the new expansion [11][13]. - Major customers include Nvidia, AMD, and AWS, with Nvidia expected to account for a substantial portion of the demand [28]. Additional Important Insights - The conference call highlighted the importance of TSMC's strategic decisions regarding capacity allocation and customer relationships, particularly in the context of the rapidly evolving AI landscape [2][4]. - The analysis of power deployment plans indicates a strong correlation between AI chip demand and CoWoS capacity, suggesting that TSMC's ability to meet this demand will be critical for its future growth [18][21]. This summary encapsulates the key discussions and insights from the conference call, focusing on TSMC's strategic capacity expansions and the implications for the semiconductor industry in the context of AI demand.