Chip shortage here too?

I tried to find Arduino Mega2560/Atmega2560 CPU 100pin TQFP chips but no one has them in stock. Have you noticed that too. I wonder how it is with Portenta boards which use newer chips. I thought that old 2560 would be immune to chip shortage but apparently it isn't.

IC's are made on a one-time basis. Several million are made, if the company thinks they will sell. Intel, in particular, builds an entire building/factory, custom made for a single processor. It is so specialized, no other devices can be made there, so they either sell the building or tear it down.
If other companies think there is a market for that device, when the supply gets low, they will buy the rights to make more of that device for some defined quantity.
If there is no more market, then the device becomes obsolete and may or not be available on what is called the "gray market". These chips are quantities of left overs from all over the world and several companies specialize in finding and selling the obsolete chips. We used to have to buy them for some customers. there are also counterfeit or inoperable chips that are sold as new.
Chip shortages have been a problem for MANY years because that is the way the industry works. People do not want to spend the money to redesign their devices to use newer chips.
Hope that bit of history helps.

Mxy 1pcs ATMEGA2560 ATMEGA16A AU ATMEGA2560 16AU LQFP 100 QFP In Stock IC MCU 8BIT 256KB FLASH 100TQFP|Integrated Circuits| - AliExpress
Probably clones or counterfeits

You're designing with an obsolete part.

What's a good modern alternative for OP to use?

It depends what you are using it for. Also quantity of devices.

Not for me, but I'd say an equivalent number of pins, 16-24 MHz, 8 bit, AVR ISA.

Does it have to be 5V?

I would argue that to be flexible if it means the other requirements are met. Adding MOSFETs for level conversion where needed is easy and cheap.

Waiting for feedback. You can probably get all you need from China.

Microchip states that it's still in production. They are also known for keeping devices in production indefinitely, as long as they're in active use. I agree better options exist though.

As aarg says it depends on his use case. But if he wants a modern 8bit AVR microcontroller he could take a look at the megaAVR-0 series, AVR DA series and AVR DB series. The tinyAVR-x series have lower pin count devices if desirable.

Most of them seem to also have Arduino cores available.

Speaking of the Portenta mentioned in the first post, it uses the STM32H7 series, which is a newer, very powerful chip and would be a good choice for new designs.

There are none STM32F or H in Digikey. I checked STM32h elsewhere too, with same results. A good chip if only you could get some.

5V chip would not require much PCB changes, but I think they no stock too.

Those chips are too small. We need all(most) of the 100 pins

For what exactly? Would an I/O expander suffice?

By the way if you're fine with BGA, Mouser have more than 700 atmega2560 in stock right now.

If not I think you're gonna have a tough time. QFP and QFN packages with that pin count isn't all that common in the first place, add the chip crisis and the Arduino framework compatibility and your options seems limited.

Driving how much current?