TSMC’s N2 Chip Node Nears Full Capacity, Securing Orders for the Next Two Years

TSMC’s N2 node, which entered volume production only six months ago, is already approaching the same capacity constraints that its flagship N3 process faced through 2027, according to an exclusive report from Culpian. The foundry is urging customers to lock in wafer allocations out to the second quarter of 2027, and large‑scale buyers have already booked most of the available capacity for the next two years. While a limited amount of N2 slots remain, the lead time for new orders is stretching toward six quarters, forcing chip designers to commit to production schedules up to a year in advance of delivery, Culpian said.

The surge in demand is being driven primarily by AI‑focused GPUs and high‑performance computing (HPC) chips, which consume more die area and command higher prices than traditional logic. Culpian notes that the “AI arms race” among startups and hyperscalers is inflating TSMC’s pricing power, and customers are less inclined to balk at the rising rates. This dynamic mirrors the pandemic‑era shortages that hit automotive manufacturers, but the current pressure is more acute because AI workloads require larger footprints and tighter performance‑per‑watt targets. TSMC’s own data, cited by Reuters, shows the company expects a 20 % revenue uplift this year on the back of AI demand, underscoring the financial incentive to prioritize N2 capacity for AI‑centric designs.

Apple, the first N2 customer, will initially use the node for chips destined for its upcoming MacBook line, while TSMC’s newer N2P variant—promising a 5 % performance boost at the same power envelope—will enter volume production in the second half of 2026, according to CEO CC Wei’s recent investor briefing. Simultaneously, the A16 node, aimed at high‑performance computing, is slated for the same timeframe. These introductions will further tighten the production schedule, as both Apple and Nvidia are already competing for the limited wafer pool. Culpian’s analysis of TSMC’s client ledger shows Nvidia’s procurement surged to $23.3 billion in 2025, overtaking Apple’s $20.7 billion, making Nvidia the largest customer for at least part of 2025.

The allocation process at TSMC remains a multi‑stage commitment. Customers first submit quarterly wafer forecasts, after which TSMC plans capacity distribution and notifies clients of their allotments. Buyers then pre‑pay for the reserved capacity, effectively locking in a production window that can be six months out from the start of fab work, with an additional four‑to‑six‑month cycle for fabrication and packaging. “Hot lots” or last‑minute runs are still possible but attract steep premiums and no guarantee of availability, Culpian explained. This extended timeline is creating uncertainty for downstream firms in computing, networking, and consumer electronics, as they must align product roadmaps with a production horizon that now stretches up to 12 months before chips are shipped.

Analysts at Deutsche Bank and JPMorgan, referenced in earlier coverage of TSMC’s N3 node, have already flagged the risk of prolonged lead times for advanced processes. The current N2 situation validates those warnings: with most of the node’s capacity earmarked through mid‑2027, the foundry’s ability to absorb new entrants or respond to sudden demand spikes is severely limited. TSMC’s recent earnings release, reported by Reuters, highlighted a 27 % year‑over‑year jump in Q4 profit, driven largely by AI‑related orders, but the company also signaled that it will not pursue a joint venture with U.S. partners to expand capacity in the near term. The combination of high‑margin AI demand and constrained supply is positioning TSMC to capture premium pricing, yet it also raises the specter of bottlenecks that could ripple through the broader semiconductor ecosystem if demand continues its upward trajectory.