Taiwan Semiconductor Manufacturing Co. is considering advanced memory chip production after Nvidia requested plans for 3D DRAM, The Information reported Friday. The potential move would extend TSMC beyond its main chipmaking business as AI hardware makers face tight memory supplies and rising costs.
The company has not announced a factory investment or production date for 3D DRAM. Any expansion would place the chipmaker into a business dominated by three established memory rivals.
The report cited two people with direct knowledge of the planning. TSMC and Nvidia did not immediately respond to Reuters' requests for comment. Shares of TSMC trading in the United States rose 7.7% in early Friday trading as investors assessed the prospect of expansion into memory chip production.
Nvidia, currently TSMC's largest customer, asked the Taiwanese manufacturer to examine a type of memory called three-dimensional dynamic random access memory, according to The Information. TSMC has recently begun drawing up plans, but the discussions remain at an early stage.
DRAM stores information temporarily while computers process tasks. Conventional designs arrange memory cells across a flat surface. By contrast, 3D DRAM stacks those cells vertically, aiming to hold more data within a smaller area.
The proposed expansion comes as AI infrastructure demand places pressure on memory supplies. The reported shortage has lifted prices and left chip designers searching for additional sources. Large buyers face higher costs when memory production cannot keep pace with demand.
Nvidia and Apple have sought other channels to secure memory as prices climb. Apple raised prices across its hardware range earlier this year after absorbing higher memory procurement expenses. Both companies are looking beyond their usual sources as supply conditions tighten.
TSMC could construct dedicated plants for advanced memory production, according to The Information. It is also exploring the purchase of an existing fabrication site that it could convert to make DRAM. The report offered no timetable for either route. That option would change an existing plant's purpose rather than require construction of a new facility.
A converted facility would follow a path that Micron pursued this year. In March, Micron agreed to acquire a Taiwan plant from Powerchip Semiconductor Manufacturing Corp. for USD 1.8 billion, with plans to adapt it for advanced memory output.
The information identified Hsu Kuo-chin, a vice president overseeing advanced packaging at TSMC, as the executive leading the exploration. Hsu previously managed Micron's regional operations, according to the account. His current division focuses on packaging processes that connect chips within computing systems.
Memory and processing components increasingly meet within tightly integrated hardware packages. Yet planning a production line differs from running one at scale. Although TSMC holds patents covering vertical DRAM technology, the report noted the challenge of achieving high-volume output with low defect rates.
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If TSMC enters advanced memory manufacturing, it would face Samsung Electronics, SK Hynix and Micron. Those companies already compete in a market where changes in supply and demand can drive sharp price swings.
The move could create complications for existing business relationships. In 2024, TSMC agreed to make base logic dies for SK Hynix's next-generation high-bandwidth memory products. Direct memory production would place it closer to a market served by an established partner.
The proposed business would also require substantial spending, whether TSMC builds new facilities or purchases and refits an existing one. At this stage, neither the proposed capacity nor the cost of any TSMC project has been disclosed.
Can TSMC turn these early 3D DRAM plans into commercial production? The timing remains uncertain. The information did not identify a preferred factory option or a planned production start, and TSMC has not announced an investment.
TSMC is reviewing 3D DRAM production following a reported request from Nvidia, but it has not set a launch date or announced an investment. The company may build new facilities or convert an existing plant. Any expansion would bring it into direct competition with Samsung, SK Hynix and Micron.