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According to reports from Wccftech, slowing global smartphone demand is unexpectedly benefiting AMD, as weakening sales of entry-level and mid-range smartphones prompt major mobile chipmakers to reduce orders for advanced semiconductor manufacturing capacity at TSMC.

Qualcomm and MediaTek have reportedly scaled back wafer allocations on TSMC’s 4nm and 5nm process nodes due to weaker smartphone market conditions. The reduction is estimated at approximately 20,000 to 30,000 wafers, equivalent to production capacity for roughly 15 million to 20 million smartphone chipsets. AMD has rapidly moved to utilize the newly available advanced-node capacity, creating what industry observers describe as a semiconductor supply chain “butterfly effect.”

The shift comes as the global AI boom continues to drive explosive demand for high-bandwidth memory (HBM) and AI-focused infrastructure. As DRAM manufacturers prioritize AI-related applications, smartphone makers are facing tighter memory supply and rising component costs, particularly in the price-sensitive entry-level and mid-range device segments.

Research firm Counterpoint estimates that in the second quarter, DRAM accounts for approximately 35% of the bill of materials (BOM) cost for an entry-level smartphone, while NAND flash memory contributes another 19%, bringing total memory costs to more than half of the device BOM. Combined with soft consumer demand, elevated component costs are forcing smartphone brands and chipset companies to reduce production volumes.

Industry sources indicate that Qualcomm and MediaTek have recently lowered utilization of TSMC’s advanced 4nm and 5nm production lines, leaving portions of previously constrained capacity available. AMD, benefiting from surging AI server and enterprise computing demand, has quickly absorbed the excess manufacturing capacity.

Demand for AMD’s EPYC server processors, which are produced using TSMC’s 5nm process technology, continues to strengthen as AI servers and high-performance computing (HPC) deployments expand globally. With mature yields already achieved on 5nm production, AMD is reportedly in a strong position to efficiently capitalize on the additional wafer capacity.

AMD CEO Lisa Su indirectly confirmed the market trend during recent remarks on the company’s first-quarter performance, stating that AMD’s growth was “more driven by unit shipments.” She noted that the company shipped significantly more CPUs, including not only its high-end Turin series, but also large volumes of Genoa processors based on the Zen architecture family.

Market analysts believe the semiconductor industry’s long-standing reliance on smartphone demand is rapidly shifting as AI infrastructure investment reshapes the global supply chain. Advanced process technologies once heavily dedicated to smartphone chips are increasingly being redirected toward AI servers and HPC applications, positioning AMD as one of the key beneficiaries of this structural transition.

For TSMC, declining smartphone-related demand is being offset by strong orders from AI and data center customers, helping maintain high utilization rates for advanced process nodes. As AI computing demand continues to accelerate, the semiconductor industry’s center of gravity is shifting rapidly from smartphones toward AI infrastructure and enterprise computing markets.