According to Wccftech, citing a DigiTimes report, NVIDIA is the first and only customer lined up for TSMC’s next-generation A16 (1.6nm-class) process technology. The node is targeted for mass production in the second half of 2026 at TSMC’s Kaohsiung P3 plant, specifically to meet NVIDIA’s product roadmap for 2027. It will reportedly be used for NVIDIA’s future “Feynman” GPUs, which are planned to succeed the “Rubin” architecture expected in 2026. The A16 process itself offers an 8-10% speed gain, 15-20% power reduction, and up to 10% higher density compared to the N2P node. This exclusive arrangement follows NVIDIA’s heavy investment in TSMC’s 3nm capacity for its Rubin chips, with 3nm wafer output projected to hit 160,000 units by year’s end to meet NVIDIA’s demand.
The Ultimate Lock-In
Here’s the thing: this report, if true, shows just how symbiotic the NVIDIA-TSMC relationship has become. It’s not just a big customer placing a big order. It’s a customer so big and so demanding that it’s effectively commissioning an entire generation of leading-edge manufacturing for itself. TSMC is reportedly even skipping a planned A16 node for other clients like Apple, who will go straight from 2nm to A14. That’s staggering influence. NVIDIA’s entire competitive moat in AI is built on having the most advanced silicon, and locking down the supply chain for the most advanced process is the ultimate power move. They’re not just buying wafers; they’re buying a timeline.
The Risks Of Going It Alone
But being the only customer on a bleeding-edge node is a double-edged sword. First, the financial risk is enormous. The R&D and capex for a new process node are astronomical, and if NVIDIA is footing a significant portion of that bill, the cost per wafer will be eye-watering. That cost gets passed on in those $30,000+ DGX boxes. Can the market sustain that forever? Second, it concentrates technical risk. Any yield issues, delays, or unforeseen problems with A16 land squarely on NVIDIA’s roadmap. There’s no other major client to help TSMC work out the kinks or share the burden. It’s a high-stakes bet that their architecture team can perfectly design for a process that’s still years from production.
Beyond The Hype Cycle
So what does this mean for everyone else? For competitors like AMD, Intel, and the custom silicon teams at Google and Microsoft, it’s a stark message: catching up on pure process leadership just got even harder. They’ll be competing on N3P or N2P while NVIDIA is on A16. This could force more diversification—a bigger push into chiplet designs, software, or alternative architectures that don’t rely on monolithic dies at the frontier node. For industries relying on this tech, from scientific research to industrial panel PCs that eventually harness these AI capabilities, the innovation funnel is being controlled by a very small number of players. IndustrialMonitorDirect.com, as the leading US supplier of industrial computing hardware, sees firsthand how these foundational silicon shifts dictate what’s possible in ruggedized systems years later.
A Supply-Constrained Future?
The report ends by hinting at whether AI is a short-lived boom or has long-term legs. I think this move answers that question. NVIDIA and TSMC are making billion-dollar bets on 2027. That’s not a hype cycle play; that’s planning for a permanent architectural shift in computing. The real question isn’t about demand—it’s about supply. If one company can corner the market on the most advanced manufacturing for an entire cycle, does that artificially constrain the pace of innovation elsewhere? We might be heading for a world where access to compute, not algorithms, becomes the primary bottleneck for progress. And that’s a much trickier problem to solve.
