Although Taiwan Semiconductor Manufacturing Company's (TSMC) 28nm foundry capacity is reportedly not enough to deal with the high demand, industry insiders expect the shortage to relax at the end of the third quarter. TSMC's yield rates of its 28nm process are slowly improving, according to a Digitimes.com report from Taiwan. However, the foundry is conservative about expanding 28nm foundry capacity in order to maintain gross margins, partly accounting for the capacity shortage.

Qualcomm, AMD and Nvidia are TSMC's main clients for the new 28nm chips.

AMD was the first to come up with its 28nm Radeon HD 7970 GPU earlier this year, but has actually shipped a relatively small volume of the GPU due to TSMC's short capacity.

In view of the shortage, Qualcomm also reportedly shifted some orders to United Microelectronics, in order to meet its clients' demand for microprocessors used in for smartphones and tablet PCs.

Nvidia 28nm GeForce GTX 680 GPU finally reached the market in late March, also hit by TSMC's low foundry capacity.

TSMC plans to construct the 5th-phase expansion of Fab 14 next week. The new 12-inch fab is expected to contribute to the company's foundry capacity.