My understanding is that defense needs proven and reliable chips, not the latest chip 3nm technology.

TSMC may have available fab capacity for 65nm process, but that is not cutting edge technology. The military needs proven technology, not the latest technology.

Autos use a lot of old tech chips because space and electrical power are not major constraints.

Apple is TSMC's biggest customer because color screens consume a lot of electricity. This is why battery size is such a major constraint for mobile phones. Smaller chip dies consume less electricity; about 20% for each 2 year generation. But even Apple does not push for more than a 50% reduction from TSMC every 2 year cycle because iPhones need to be reliable.