Apple, AI, and TSMC: Why the balance of power is changing

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For many years, Apple was by far the most influential customer of the global semiconductor industry. Its close collaboration with TSMC laid the foundation for the modern foundry model and enabled the development of ever-newer manufacturing technologies. However, a recent report shows that this balance of power is shifting. The rapid rise of AI computing is changing who finances new chip technologies and how much influence Apple actually still has on future manufacturing hubs.

SemiAnalysis's comprehensive report examines in detail how Apple and TSMC jointly built today's contract manufacturing structure. At the same time, it makes clear that new, well-capitalized customers in the AI sector are putting pressure on the existing model. The analysis provides figures, timeframes, and concrete examples illustrating how Apple's role is changing.

How Apple became TSMC's most important customer

Apple began investing heavily in TSMC's new manufacturing processes early on, starting with the A8 chip in 2014. This strategy made Apple the industry's most important customer within just a few years. The company was willing to bear high initial costs, finance improved yields, and closely align its own annual product cycle with TSMC's technological roadmap.

This willingness gave TSMC a decisive advantage over competing contract manufacturers. Over the past decade, Apple regularly accounted for more than half of the initial production of each new manufacturing node. In some cases, Apple even covered almost the entire early production capacity. In doing so, Apple effectively financed the transition to increasingly smaller and more complex structures at a time when other customers could not bear this risk.

Apple's financial importance to TSMC

The figures in the report clearly underscore this role. Apple's annual spending with TSMC rose from around $2 billion in 2014 to approximately $24 billion in 2025. In parallel, Apple's share of TSMC's total revenue grew from a single-digit percentage to as high as 25 percent at times. For years, Apple was thus by far the most important revenue driver for state-of-the-art manufacturing processes.

The impact of AI accelerators and new major customers

However, with the rise of AI computing, TSMC's customer base has fundamentally changed. A new class of customers, particularly AI accelerator providers like NVIDIA, is now able to purchase very large quantities of advanced manufacturing capacity. These companies require state-of-the-art chips for data centers and AI workloads and can also afford the high costs.

As a result, TSMC's revenue structure has shifted significantly. Smartphones previously accounted for almost half of its revenue. This share has declined as high-performance computing and AI applications have grown considerably and now constitute the largest segment. While Apple remains the largest single customer by revenue, it is no longer the only player capable of financing large-scale capacity expansion.

Implications for future manufacturing hubs

According to SemiAnalysis, this shift is already noticeable in the next generation of technologies. Apple's share of the early production of TSMC's N2 and A16 nodes is expected to be lower than in previous generations. The A16 node, in particular, is geared more towards high-performance computing and less towards traditional mobile products like smartphones.

As a result, Apple loses influence in these early phases, since other customers occupy a larger share of the initial capacity. This marks a clear difference from previous nodes, where Apple almost exclusively dominated early production.

Possible return to stronger influence at later nodes

According to SemiAnalysis's model, however, Apple is strengthening its position again with later manufacturing nodes like the A14. These nodes are designed from the outset to support both mobile devices and high-performance products. In this scenario, Apple's share of early production capacity increases once more, as iPhone and Mac chips again become key revenue drivers.

Apple can once again leverage its strengths here by ordering large quantities from a broad product portfolio. This will increase its influence on the capacity utilization and profitability of these manufacturing hubs.

Supply chain diversification

Although Apple remains heavily reliant on TSMC for its most advanced chips, the company is exploring alternatives for less risky components and certain chip categories, according to SemiAnalysis. The goal is to diversify its supply chain without jeopardizing its flagship products.

Intel's upcoming 18A-P process is mentioned as a possible option. This could be suitable for selected Apple silicon chips without causing disruptions to its most important products.

Apple's influence remains significant, but it is no longer the sole deciding factor

The SemiAnalysis report shows that Apple has not lost its central role in the semiconductor industry, but its influence on TSMC is changing. The rise of AI computing has brought new, financially powerful customers and reduced dependence on a single major client. Apple remains TSMC's largest single customer, but will have to share influence, capacity, and technological priorities more with other players in the future. (Image: monsit / DepositPhotos.com)