TSMC Weighs 3D DRAM Production at Nvidia’s Request as Shortage Lifts Chip Prices
Key Facts
U.S. depositary receipts of Taiwan Semiconductor Manufacturing Co. (TSMC) rose 7.7% in early trading on Friday, November 6, as investors weighed the possibility of an expansion into the AI hardware supply chain, according to Investing.com. Reuters reported the same day, citing The Information, that the company is considering entering advanced memory chip production, a move that could allow it to capture a larger share of the AI hardware market. TSMC has begun preparing plans to make a specific type of memory, three-dimensional dynamic random-access memory, or 3D DRAM, in response to a request from Nvidia, the report said. The report described Nvidia as TSMC’s largest customer but did not cite a finalized supply agreement or a specific investment between the companies. The news therefore concerns a strategic possibility under consideration, not an announcement that manufacturing has begun or a timetable for implementation.
According to Reuters, The Information’s report is based on two people directly familiar with the matter. The report attributed leadership of the effort to Hsu Kuo-chen, a TSMC vice president responsible for advanced packaging, linking the memory study to an area where the company works on components for AI systems. It remains unclear when TSMC might begin production, according to the report cited by Reuters. The company has also announced no final decision on production capacity or the sites it might use. The absence of an announced timeline means the move is still at the planning stage, with the company exploring a path to expansion, rather than operating production lines.
TSMC’s options include building new factories dedicated to advanced memory chips, according to the report. The company is also considering acquiring an existing factory and converting it to memory production, a different path from building new facilities. The report gave no investment amount or production capacity for either option. Presenting both alternatives indicates that the company has not yet decided how it would enter the business if it proceeds. The timing of any move from planning to production remains unknown, Reuters reported.
TSMC’s deliberations come as a severe shortage of memory chips, driven by AI demand, has pushed up prices and prompted chip designers to seek additional supply, Reuters reported. The shortage puts memory at the center of the expansion of computing infrastructure, as hardware producers compete to secure the components they need. In this context, Nvidia’s possible interest in 3D DRAM frames the move as a response to supply needs, but the report does not establish that the two companies have a supply contract. 3D DRAM is based on stacking memory cells vertically rather than arranging them in a single horizontal layer, increasing capacity. This structure differs from the traditional horizontal cell arrangement; the report provided no other technical specifications for the product TSMC is considering.
If TSMC enters the advanced memory market, it would compete with Samsung Electronics, SK Hynix and Micron, Reuters reported. This potential competition would broaden rivalry in a market whose importance is tied to the availability and prices of AI chips, as chip designers seek additional sources. The report did not specify how the move would affect companies’ market shares or prices, and did not say that TSMC had begun commercial production. TSMC and Nvidia did not immediately respond to Reuters’ requests for comment, leaving details of the request and the plan without direct confirmation from the companies. The report also gave no announced date for a subsequent decision on production.
The study follows TSMC’s report of consolidated revenue of about 511.86 billion Taiwan dollars in September 2026, up 54.6% year over year and down 0.6% from August, according to company data. In its third-quarter results, the company said revenue from its high-performance computing platform rose 22% from the previous quarter and accounted for 68% of total revenue for the quarter. These figures provide context for the potential expansion’s connection to advanced computing needs, while September revenue comparisons are separate from the decision on memory production. TSMC also forecast fourth-quarter revenue of between 52.3 billion and 54.3 billion U.S. dollars, saying the midpoint represented quarterly growth of 14% and annual growth of 58%. The company is scheduled to report October 2026 sales on November 10, according to its investor relations calendar.