Apple may not end this year as TSMC's biggest customer - PhoneArena

For years Apple has been TSMC’s biggest customer. It made sense because not only did the world’s leading contract foundry build the A-series application processors used for the iPhone and iPad, it manufactured the M-series processors used on some iPad models and Macs. TSMC also will produce the 5G modem chips that Apple designed which will reportedly replace the Snapdragon 5G modems on the iPhone SE 4 and the iPhone 17 Slim.

While in 2024 Apple accounted for 25.2% of TSMC’s annual revenue and Nvidia generated 10.1% of the foundry’s top line, a shift could soon occur according to Citi Securities analysts who say that demand for AI chips could propel Nvidia to the top spot replacing Apple. Nvidia is estimated to make up 20% of TSMC’s gross this year and this huge year-over-year increase could reduce Apple’s contribution leaving Nvidia at the top.

Additionally, Nvidia has a huge client list of its own which means that as its business improves, it will need to have TSMC manufacture more chips. This higher order volume could result in Nvidia taking over the title of “TSMC’s top customer” from Apple.

The Citi Securities analysts also say that TSMC will see strong growth in the next two to three years thanks to heavy demand for specialized AI-based ASIC (Application-Specific Integrated Circuit) chips. Additionally, most AI chips will be built on TSMC’s 3nm node by the end of 2025. This should result in a higher average selling price for TSMC’s silicon wafers this year contributing to higher profits for the company.

Despite Nvidia’s rapid growth, Apple will continue to be an important TSMC client and has reportedly reserved all of the foundry’s 2nm capacity for the production of the A20 and A20 Pro application processors that are expected to power the 2026 iPhone 18 series.

TSMC hopes to see its top line grow by 20% to 25% this year while keeping gross profit margins above 50%. Citi Securities analysts say that TSMC’s business will get a shot in the arm this year from building the chips needed to provide smartphones and PCs with on-device AI which is considered more secure than using cloud AI in data centers. The latter is still considered the mainstream way that AI is processed on personal computers and smartphones. Either way, Nvidia will benefit from the AI explosion.

After all of this analysis, it is possible that Nvidia’s strong growth might not impact TSMC at all. Yesterday we told you about a rumor that says both Nvidia and Qualcomm might leave TSMC for Samsung Foundry even though the latter has a history of experiencing poor yields on its advanced chip production.

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