TAIPEI (Taiwan News) — Broadcom warned Tuesday that surging AI demand is straining supply chains, with Taiwan’s TSMC emerging as a key bottleneck, Reuters reported.

The chip designer said it is seeing capacity constraints across the technology sector, particularly at TSMC, its main manufacturing partner.

Natarajan Ramachandran, a director in Broadcom’s Physical Layer Products division, said TSMC’s capacity has become constrained in recent years. “They will be increasing the capacity to 2027, ​but that has become a bottleneck, or that has kind of choked ⁠the supply chain in 2026,” he said.

TSMC, the world’s leading producer of advanced chips, has said its capacity is tight as demand from infrastructure buildouts grows. The company is working to close the gap between supply and demand.

Ramachandran said the supply strain extends beyond semiconductors, affecting other parts of the technology chain. Components such as lasers and printed circuit boards have also become bottlenecks.

Ramachandran added that lead times for certain PCBs used in optical transceivers have stretched from about six weeks to as long as six months. Suppliers in Taiwan and China are facing capacity limits, contributing to delays.

Despite the constraints, Ramachandran said he is not overly concerned, as new suppliers and capacity expansions are expected to ease pressure over time. The company expects supply conditions to improve as investments come online.

Customers are signing long-term agreements to secure capacity, with contracts extending three to four years, Ramachandran explained. Samsung Electronics recently highlighted a similar trend, working with clients on longer-term supply deals.