For over fifteen years, a symbiotic relationship between Apple and TSMC has allowed the iPhone maker to leapfrog the competition. By being the “anchor tenant” for every new manufacturing process, Apple essentially funded TSMC’s growth in exchange for exclusive, early access to the world’s fastest chips. But the landscape of 2026 has changed, as per a report from prominent technology journalist and semiconductor analyst Tim Culpan. As the AI boom reaches a fever pitch, Apple is finding that its seat at the head of the table is no longer guaranteed.
Last August, TSMC CEO CC Wei visited Apple’s headquarters with a message that Tim Cook’s team likely found sobering. For the first time in years, Apple was told it must acquiesce to a massive price hike for its chip supply. While Apple has historically used its massive order volume to dictate terms, TSMC’s record-breaking 62.3% gross margin proves that the power dynamic has shifted.
The reason for this shift is simple: the smartphone market has plateaued while AI is skyrocketing. While Apple’s product revenue grew a modest 3.6% over the last year, Nvidia’s sales are on track to climb by a staggering 62%. Nvidia’s high-powered GPUs are now the most coveted items in tech, and data suggests Nvidia may have already overtaken Apple as TSMC’s largest customer.
A single AI GPU from Nvidia takes up a significantly larger footprint on a silicon wafer than a standard iPhone processor. In a world of limited manufacturing capacity, every wafer allocated to an AI giant is a wafer that isn’t producing chips for your next iPhone or Mac. For the first time in a decade, Apple is having to fight for its place in line across TSMC’s dozens of fabrication plants.
Apple is currently a lead buyer for the 2-nanometer (N2) process, which represents the pinnacle of current chip design. Looking toward the second half of 2026, TSMC is preparing to ramp up the “A16” node, featuring “Super Power Rail” technology. This innovation separates a chip’s signal from its power supply to boost efficiency—a feature TSMC says is “best for complex AI tasks,” further intensifying the rivalry for supply.
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