TSMC and Huida’s AI cooperation has been tense. US media revealed that the pressure on both sides is increasing and they rely on -two keys- to maintain their relationship.

Recent reports from American tech media indicate that Nvidia’s partnership with TSMC has experienced strains as the company aims to maintain its dominance in the AI sector. In August, it was revealed that Nvidia’s next-generation AI chip, the Blackwell series, faced delays of over three months due to design flaws. The Information website has shed light on this situation, reporting that the tensions between Nvidia and TSMC escalated to the point of mutual accusations.

According to two sources cited by The Information, Nvidia CEO Jensen Huang announced the Blackwell chip in March, but shortly after, engineers discovered issues occurring in typical high-voltage environments found in data centers. Some Nvidia engineers believed these problems stemmed from design defects in Blackwell. Meanwhile, TSMC employees pointed out that Nvidia had pressured them to accelerate production, resulting in less time for TSMC to address the issues compared to their other major client, Apple.

In August, further reports emerged regarding the shipping delays, prompting shareholders to inquire with TSMC. TSMC’s investor relations team attributed the delays to Nvidia. This information came from three investors who contacted TSMC’s investor relations. At the same time, other Nvidia engineers blamed TSMC’s new technology, which combines different chip types, for slowing down Blackwell’s production—a point that reached financial analysts tracking both companies.

Although The Information noted this may be a minor episode in their decades-long collaboration, it underscores the increasing pressure Nvidia is putting on TSMC as funding pours into Nvidia’s AI business. To solidify its position, Nvidia is urging its partners to release new chip architecture annually, rather than every two years. TSMC is striving to ramp up its latest packaging technology, CoWoS, aiming for a 60% annual increase in capacity by 2026 to meet Nvidia’s demands.

The report identified two main reasons for the continued partnership between Nvidia and TSMC. First, competitors like Samsung and Intel still lag behind TSMC in technology and cannot produce advanced chips, leaving Nvidia reliant on TSMC. Second, TSMC’s founder, Morris Chang, despite being retired, still wields considerable influence; it was revealed that he raises costs for customers looking to return to TSMC after shifting their business to other foundries.

Further details from The Information highlighted a tense moment in a recent meeting between Huang, TSMC chairman and CEO C.C. Wei, and senior executives. When Huang proposed creating an advanced packaging production line outside TSMC’s main facilities in Taiwan, the atmosphere became charged, with TSMC executives expressing concerns over costs and the potential disruption to their expansion plans, as other clients might request similar arrangements. The conversation grew heated, with some TSMC executives questioning Nvidia’s importance as a customer, until C.C. Wei intervened to defuse the tension—a detail first reported by Taiwanese media.

In response to the reports, a Nvidia spokesperson indicated that the company has made adjustments to Blackwell to enhance production yield and has modified timelines accordingly. The spokesperson added that TSMC “remains an outstanding and important partner” and has made significant investments over the years to support Nvidia and its partners. TSMC declined to comment.

Additionally, Huang recently stated that Blackwell is “in full production” and that demand for the product is “crazy,” effectively alleviating concerns about potential shipping delays due to engineering issues.