There was once an absolute "hierarchy" in Silicon Valley. Apple, the driving force behind the smartphone revolution, was thought to be the unshakeable "most important customer (VIP)" of TSMC, the world's largest foundry. However, at the start of 2026, that myth may have crumbled.

Remarks by NVIDIA CEO Jensen Huang, along with rumors leaking out of Asia's supply chain, clearly suggest that this hierarchy in the semiconductor industry has finally been overturned. NVIDIA, riding the massive wave of the AI boom, has finally surpassed Apple to become TSMC's largest customer. This can be described as a historic paradigm shift, signaling that leadership in the tech industry has completely moved from "mobile" to "AI."

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Jensen Huang's "Victory Declaration": A Message for Morris Chang

It all started with remarks by Jensen Huang on the podcast "A Bit Personal with Jodi Shelton," hosted by Jodi Shelton, co-founder of the Global Semiconductor Alliance (GSA).

The Track Record Behind the Confidence

During the interview, Shelton referenced the anecdote that when Huang first met TSMC founder Morris Chang in his younger days, he declared, "I will become your biggest customer," and asked about the source of that confidence.

Huang, while joking and downplaying himself, stated a decisive fact.

"By the way, Morris (Chang) would be happy to know that NVIDIA is now TSMC's biggest customer."

This statement officially confirms that NVIDIA—which lost its crown to Apple back in the 2010s amid the explosive growth of the smartphone market—has reclaimed the top spot roughly a decade later. Apple, which came to account for the majority of TSMC's revenue by taking on the bulk of processor manufacturing for the iPhone and iPad, is now being outpaced by the current frenzy over "generative AI," which is generating silicon demand that surpasses even hundreds of millions of iPhone units.

A Historic Revenge

In the early 2000s, NVIDIA was TSMC's top customer, but that position shifted to Apple with the rise of mobile internet. Particularly after Intel missed its opportunity in the mobile foundry business, Apple effectively held exclusive rights to use TSMC's most advanced processes. However, Huang's remarks symbolize the end of that "mobile era" and the arrival of the "AI computing era."

Rumored Elimination of "Apple Preferential Treatment" and Skyrocketing Prices

Behind NVIDIA's rise, what's further shaking the industry are unsettling rumors about a shift in the relationship between TSMC and Apple. According to Weibo leaker "定焦数码," TSMC may be reconsidering the "special treatment" it has long extended to Apple.

TSMC CEO's Unusual "Direct Negotiation"

According to the leak, there is information suggesting that TSMC CEO C.C. Wei visited Apple's headquarters and demanded "the largest price increase in recent years."

Under the industry's conventional wisdom until now, Apple was able to secure priority on advanced process production lines and negotiate favorable pricing terms, backed by its overwhelming order volume. However, this leaked information suggests two shocking possibilities:

  1. Loss of Priority Shipping Status: Apple may no longer be in a position to unconditionally secure priority access to TSMC's production capacity.
  2. Ruthless Price Pass-Through: Due to the tight demand for AI semiconductors, other customers (mainly NVIDIA) are willing to pay premium prices to secure manufacturing slots, giving TSMC leverage to negotiate more aggressively with Apple.

Structural Factors: Differences in Price Elasticity

Why can TSMC take such a strong stance against Apple, its long-time partner? The answer lies in the decisive difference in "price elasticity" between NVIDIA's and Apple's business models.

  • Apple's (B2C) Limits: Smartphones and laptops are consumer electronics products, and there is a clear "ceiling" on price. If the price of the iPhone were doubled, sales would plummet. As a result, Apple must remain extremely sensitive to rising component costs.
  • NVIDIA's (B2B) Insatiable Demand: On the other hand, NVIDIA's flagship products—AI GPUs like the H100 and Blackwell—are purchased by giant tech companies (hyperscalers) such as Google, Microsoft, and Meta. For them, GPUs are not a "cost" but an "investment" that generates future revenue. Falling behind in the race to train AI models means death, so even if the unit price of a chip rises by thousands of dollars, they will continue to pour in billions of dollars.

Due to this structure, the one willing to pay "more, and more often" to TSMC is no longer Apple, but the NVIDIA ecosystem.

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A New Battle Over the "2nm Generation"

Even though Apple has fallen from the top spot, it remains an important customer for TSMC. In particular, a fierce battle continues behind the scenes over the next-generation process technology, the "2nm process (N2)."

Apple's A20 Chip and Securing 2nm Capacity

According to previous reports, Apple is said to have already secured more than half of TSMC's 2nm production capacity for the "A20" and "A20 Pro" chips destined for the iPhone 18 series (tentative name). However, the manufacturing cost of the 2nm process is expected to jump significantly compared to the 3nm generation, and the per-wafer unit price is expected to be extremely high.

What's notable here is the shift in the meaning of "priority." Previously, "clearing the line for Apple" was the top priority, but going forward, Apple may be treated with priority "between NVIDIA's AI chip production, or on par with it." AI chips in particular have enormous die sizes and require advanced packaging technology (CoWoS), consuming a massive amount of TSMC's resources.

The Shadow of the Proprietary AI Chip "Baltra"

In addition, it has also been reported that Apple is developing an AI server chip dedicated to inference, codenamed "Baltra". This is expected to launch around 2027, and it may adopt TSMC's 3nm process (N3E or N3P). Apple itself is also accelerating its investment in data centers, deepening its reliance on TSMC not just for devices (the iPhone) but on the infrastructure side as well. This means Apple is also stepping into the same competitive territory as NVIDIA.

The Future and Risks Brought by This Tectonic Shift

What impact will NVIDIA's seizure of the crown and TSMC's changing pricing strategy have on the tech industry as a whole?

1. Upward Pressure on Smartphone Prices

If TSMC follows through with a price hike for Apple and eliminates priority discounts, those costs are likely to be passed on to final products. A scenario in which the prices of the iPhone's "Pro" models or MacBooks rise further over the coming years is quite plausible. Consumers may need to be prepared to pay a higher price for hardware advancements.

2. Dependency Risk on the "AI Bubble"

Currently, TSMC's capital expenditures (Capex) have ballooned to a record scale (in the range of $52 billion to $56 billion) in anticipation of AI demand. However, this is a double-edged sword. If the "AI bubble" bursts and data center monetization doesn't proceed as expected, TSMC will be left with excess inventory and overcapacity.

At that point, Apple's presence, backed by stable demand, would once again grow in importance. "NVIDIA has explosive power, but Apple is stable." TSMC's management is being forced to carefully steer the ship, balancing the two companies while managing this volatility.

3. The "Auction-ification" of the Foundry Business

Production slots for cutting-edge semiconductors are beginning to resemble an "auction" more than a "contract." It's a world where whichever company can offer higher profit margins wins the capacity. This could become a barrier that makes it difficult for players other than deep-pocketed Big Tech—smaller chip design companies and startups—to access advanced processes.

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Silicon Supremacy Shifts to "Computing Power"

The fact that NVIDIA has become TSMC's largest customer is a decisive milestone symbolizing that the value standard of digital society has shifted from "connectivity (connecting via smartphones)" to "intelligence (thinking via AI)."

Jensen Huang's confident remarks and the rumors of tough price negotiations with Apple show that the dynamics of power in the semiconductor industry have changed irreversibly. We are now witnessing the very moment in which the value of silicon is being redefined. The price of the next iPhone, and the pace at which AI services evolve, will be determined by this "new hierarchy" on Taiwan's production lines.

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