Taiwan Semiconductor Manufacturing Co. is preparing to increase production of its 2-nanometer chips as demand from Nvidia continues to rise, according to Reuters. The move comes as the global semiconductor industry adjusts to tighter US export restrictions on advanced AI chips bound for China.

The planned ramp-up underscores how quickly supply chains are being reshaped by the race for high-end computing hardware. TSMC, the world’s largest contract chipmaker, supplies critical components used in artificial intelligence systems, data centers and advanced consumer devices.

At the same time, the new export controls could complicate shipments and planning across the sector. Companies that rely on cutting-edge chips are now navigating both strong demand and fresh geopolitical pressure, particularly in markets tied to China.

For TSMC and its customers, the challenge will be balancing aggressive production growth with shifting trade rules. The company’s 2nm technology is among the most advanced in the industry, and its output decisions are likely to remain a closely watched indicator of where the AI hardware boom is headed.