TSMC N3 is fully booked, upcoming N2 is extremely expensive and booked mostly by Apple and Nvidia, maybe Intel booked something in case their 18A sucks. TSMC N4 (enhanced N5) is utilized by Nvidia for RTX 5000 and Hopper, among other things. Intel 4 is in fact 7 nm, a bit more densier than TSMC N6 though but not enough significant leap to make AMD steer that way. So really no other choice but to go with Sammy if TSMC is too expensive. Sammy's N4 has about <5% less transistor density than TSMC's N4, while achieving about 20% higher density than TSMC' N6.
Sure, TSMC N4 would be a better choice.
Zen 6 12-core CCD is reportedly gonna be made using TSMC N3 process, which should allow for achieving similar size as does 12-cores in Strix Point already made using TSMC N4. TSMC N3 has about 55% higher density than TSMC N4, which is something that should allow AMD to achieve 12 full Zen 6 cores (incl. 48 MB L3 cache) per CCD. Anyway, AMD really needs more cores per CCD to stay competitive, as Intel keeps raising cores.
If AMD stays with 8 cores per CCD in Zen 6, that's gonna be a total disaster. Since Zen 5 is already AVX-512 focused generation with improved caches and prediction algorithm, I can't think of anything else but increasing cores with Zen 6 to increase performance enough.