Broadcom flags supply constraints, says TSMC capacity a bottleneck

Chip designer Broadcom said it is seeing supply chain constraints, including capacity limits at its manufacturing partner TSMC, highlighting the ripple ​effects of soaring demand for AI chips on the broader tech ‌industry.

“We are seeing that TSMC is hitting (production capacity) limits,” Natarajan Ramachandran, director of product marketing in Broadcom’s Physical Layer Products division, told reporters on Tuesday, adding he would have ​described TSMC’s capacity as “infinite” until a few years ago.

“They will be ​increasing the capacity to 2027, but that has become a bottleneck, ⁠or that has kind of choked the supply chain in 2026,” he ​said.

The Taiwanese firm, ​the world’s main producer of advanced AI chips, said in January that capacity was tight, as the boom in AI infrastructure buildout has soaked up much of its advanced production lines.

The ​world’s largest contract chipmaker, whose major customers also include Nvidia and Apple – also ​said at the time that it was working hard to narrow the gap between supply ‌and ⁠demand.

Broadcom’s Ramachandran said supply constraints extend beyond chips to various tech supply chains.

“Even though there are multiple suppliers in the industry today … there is definitely a supply constraint in the laser space,” he said, adding that printed circuit boards (PCBs) ​had also emerged ​as an “unexpected” bottleneck.

Ramachandran ⁠said both Taiwanese and Chinese PCB suppliers are facing capacity constraints, contributing to longer lead times. He did not name ​the suppliers.

Many customers are now entering long-term agreements with ​suppliers to ⁠secure capacity commitments for as long as three to four years, he said.

The trend was underscored by memory chipmaker Samsung Electronics, which said last week that it is ⁠working ​with major customers to shift to longer contracts ​of three-to-five years.

The move reflects customers’ desire for longer-term supply security and suppliers’ efforts to guard ​against demand swings. Reuters