TSMC Sets Up a $500 Million Fund to Find the Next Nvidia, Lifting Its Startup Bet to $1.7 Billion

TSMC, the foundry that builds nearly every advanced AI chip on the market, is preparing to put serious money behind the companies that will design the next generation of them. Kevin Zhang, the company's senior vice president of business development and global sales and a deputy co-chief operating officer, told Nikkei Asia that TSMC plans to set up a $500 million venture fund aimed at chip startups and their upstream suppliers.

The new vehicle is more than twice the size of the $200 million startup fund TSMC created in 2021, which focused on helping young fabless designers adopt the company's advanced process nodes. Zhang said the new fund will not be limited to direct customers: it may also invest in suppliers and other upstream partners, expanding TSMC's reach across the whole semiconductor ecosystem rather than only the companies that already buy its wafers.

"We think it is time to formalize our investment mechanism," Zhang said in remarks translated from the Nikkei interview. "We also want to broaden the scope beyond direct customers and develop a healthier ecosystem, including suppliers and other upstream partners." He added that the returns on the 2021 fund had been excellent, and that TSMC does not rule out expanding the new fund's size if needed.

The reasoning behind the fund is blunt. "Speaking of TSMC, people first think of Apple, Nvidia, AMD and Broadcom. Yes, they are all excellent customers," Zhang said. "But don't forget: when Nvidia first worked with us, it was also a startup. We want to support today's Nvidia, and also foster the Nvidia of the future."

The $500 million vehicle sits on top of two larger, previously disclosed decisions. TSMC's board, at its November 10 meeting, approved investment ceilings of up to $500 million each in OpenAI and Anthropic — preferred shares in the former, and common shares at the IPO price in the latter — as part of a strategy Zhang described as a virtuous cycle between the foundry and the AI companies driving demand for its leading-edge capacity. Counting the 2021 fund, the new venture arm, and the two AI-lab allocations, TSMC's committed outlay across all three buckets reaches roughly $1.7 billion.

The timing is notable. AI chip demand has pushed TSMC's revenue to repeated records this year, while its most important customer relationships — Nvidia above all — are being reshaped by Nvidia's leadership turmoil in Washington. A formal investment arm gives TSMC a second lever beyond manufacturing: it can now take small equity positions in the startups that may become its next anchor customers, locking in loyalty before they scale.

For fabless startups, the fund changes a subtle dynamic. TSMC capacity is scarce and allocation decisions are consequential; a foundry that is also an investor has both more information and more influence over who gets it. Zhang framed the fund as ecosystem-building, and the cap of $500 million is small against TSMC's roughly $30 billion quarterly revenue. But the precedent — a neutral foundry becoming a systematic investor across the supply chain, suppliers included — will be watched closely by the startups it is meant to attract, and by the incumbents it now partially owns a stake in displacing.