I definitely believe them on the semiconductor shortage, its effected multiple businesses with a lot more resources than Square (Sony being the obvious one) so I do genuinely believe they wanted to add more servers but couldn't.
I do think whenever a business tells consumers "We did everything" we should be sceptical though, because they really mean "We looked at profits and decided we had done as much as was cost effective." and as much as I like Square, and especially the dev team, I think we should look at their business decisions with the same scepticism as game companies with much worse reputations.