Demand above supply, financing below demand

TSMC reported third-quarter net profit of NT$763.1 billion, up 68.7% on a year earlier, its sixth record quarter in a row¹. The operating margin was 58.7%, above the top of its own guidance. It guided fourth-quarter revenue to between $52.3 billion and $54.3 billion¹.

The interesting sentence was about customers. According to SemiAnalysis’s Sravan Kundojjala, TSMC is checking whether buyers have the financing and supporting components to deploy what they order, and “even after those checks” demand remains “well above its supply capacity”¹. A foundry that audits its customers’ funding is telling you where it thinks the risk sits.

The market agreed, from the other side. Twenty of the most valuable AI and semiconductor stocks shed more than $1 trillion in value this week². CoreWeave fell more than 15% on Wednesday after its bond yields spiked to near 15%³, then rose 5.94% on Thursday after Nvidia’s Jensen Huang said its “cost of capital is actually decreasing”². Broadcom’s Hock Tan had warned on Monday that financing could be a bigger obstacle to AI expansion than shortages of chips or electricity².

Physics, then politics, then finance. The physics is fine: the fabs are full. The binding constraint for the next phase is the cost of borrowing to build the halls the chips go into. Dan Ives of Yorkville Ives put it in one line: rates are “a financing question, not a demand question”². That is correct, and it is also the question.