TSMC stock slips despite 2nm boom: why Apple and Nvidia are raising orders

Apple and Nvidia are pulling 2nm demand forward

The demand signal is unusually broad. EDN reported that Apple, Nvidia, AMD, Qualcomm and MediaTek have all increased orders for TSMC’s 2nm family, while the company is bringing five 2nm fabs online this year across Hsinchu and Kaohsiung.

TSMC expects first-year 2nm output to be 45% higher than the first-year output of 3nm in 2023.

Capacity is also projected to grow at a roughly 70% compound annual rate from 2026 through 2028, according to the report.

That helps explain why analysts increasingly see N2 as more than a routine process migration.

“TSMC’s N2 is looking like it will be one of the company’s greatest hits,” TechInsights vice-chair Dan Hutcheson told EE Times earlier this year.

He said more than 15 customers were already working on the node, with publicly known interest from Apple, Nvidia, Google, Broadcom, AMD and others.

The implication is important as 2nm is shaping up as another premium node where demand could remain ahead of available supply.

The real debate is shifting towards margins

The complication is that meeting that demand is expensive.

TSMC is simultaneously ramping 2nm, expanding advanced packaging and building overseas fabs. Those investments reinforce its competitive position, but they also create near-term pressure on profitability at a time when investors have become accustomed to exceptionally strong margins.