Broadcom Warns Taiwan Semiconductor Capacity Is Maxed Out

On Tuesday, Broadcom Inc. (NASDAQ:AVGO) signaled growing strain in the AI supply chain, warning that limited capacity at Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is emerging as a critical bottleneck. The company said surging AI demand is stretching production, with Taiwan Semiconductor “hitting limits” and constraining supply through 2026 despite planned capacity expansion, Reuters reported Tuesday. “We are seeing that Taiwan Semiconductor is hitting (production capacity) limits,” Natarajan Ramachandran, director of product marketing in Broadcom’s Physical Layer Products division, said, according to Reuters. He added that he would have described Taiwan Semiconductor’s capacity as “infinite” until a few years ago. “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. Shortages are also spreading beyond chips to lasers and printed circuit boards, with lead times for some components extending to six months. Customers are increasingly locking in long-term supply deals, a trend echoed by Samsung Electronics Co., Ltd. (OTC:SSNLF), as companies seek greater supply security. Technical Analysis TSM is trading 3.8% below its 20-day SMA, but 5.5% above its 100-day SMA, a “short-term cooling, longer-term uptrend intact” look. Shares are up 86.82% over the past 12 months and, within the $134.25 to $390.20 52-week range, they’re positioned closer to the highs than the lows. The RSI is at 45.12, which sits in neutral territory and suggests the recent pullback has relieved prior overbought pressure. MACD is at -4.3964 versus a signal line of -1.6846, keeping bearish pressure in place as momentum has not yet flipped back to the upside. The combination of RSI in the 30–50 range (45.12) and bearish MACD (-4.3964 below -1.6846) suggests mixed momentum. Key Resistance: $380.00 Key Support: $332.00 Earnings & Analyst Outlook Looking further out, the next major catalyst for the stock arrives with the April 16, 2026 (estimated) earnings report. EPS Estimate: $3.27 (Up from $2.12 YoY) Revenue Estimate: $35.40 Billion (Up from $25.53 Billion YoY) Valuation: P/E of 32.5x (Indicates premium valuation relative to peers) Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $401.67. Recent analyst moves include: DA Davidson: Initiated with Buy (Target $450.00) (February 13) Barclays: Overweight (Raises Target to $450.00) (January 16) TD Cowen: Hold (Raises Target to $370.00) (January 16) Top ETF Exposure Invesco FTSE RAFI Emerging Markets ETF (NYSE:PXH): 6.23% Weight Dan IVES Wedbush AI Revolution ETF (NYSE:IVES): 5.81% Weight Harbor International Compounders ETF (NYSE:OSEA): 6.88% Weight Significance: Because TSM carries such a heavy weight in these funds, any significant inflows or outflows will likely trigger automatic buying or selling of the stock. Price Action TSM Stock Price Activity: Taiwan Semiconductor shares were up 0.03% at $338.54 during premarket trading on Tuesday, according to Benzinga Pro data. Photo via Shutterstock