TSMC, the leading semiconductor manufacturer in Taiwan, faces significant risks tied to its geopolitical context and the growing demand for AI technology. The ongoing tension between the U.S. and China complicates the semiconductor supply chain, especially given China’s claims over Taiwan. Dario Amodei, CEO of Anthropic, voiced strong concerns about selling advanced AI chips to China, likening it to selling nuclear weapons. He advocates for maintaining U.S. dominance in AI, but the reality is that Taiwan's semiconductor production is vulnerable to military actions, making this stance problematic. Demand for AI infrastructure is outpacing supply, impacting major tech firms like Amazon, Microsoft, Google, and Meta. TSMC’s CEO, C.C. Wei, confirmed that the shortage stems from a lack of chips, not power supply issues. Despite the rising demand, TSMC's capital expenditures (CapEx) had stagnated after a significant spike in 2021. The company’s reluctance to invest heavily in new capacity has turned it into a bottleneck for AI development. This shortfall has already cost tech companies potential revenue as they scramble to meet demand. Recently, TSMC has begun to increase its CapEx, planning to spend between $52 billion and $56 billion this year, a 32% increase. However, Wei expressed caution, emphasizing the need to ensure that demand is real before committing to such substantial investments. Building new fabrication plants takes time, with few immediate returns from this increased spending. The effects of these investments will likely take years to materialize, raising concerns about TSMC's ability to keep pace with the rapidly evolving AI market.