tsmc and nvidia eye arizona for cutting-edge chip production
Arizona, Thursday, 5 December 2024.
Taiwan Semiconductor Manufacturing Company (TSMC) is in discussions with NVIDIA to produce its advanced Blackwell AI chips at TSMC’s newly constructed facility in Arizona. This move marks a significant step in expanding semiconductor manufacturing in the United States, with production expected to commence early next year. While these chips are currently manufactured in Taiwan, the new Arizona facility will handle the front-end production process. However, the chips will still need to be sent back to Taiwan for final packaging due to the absence of TSMC’s CoWoS technology in the U.S. plant. This collaboration, if finalized, promises to solidify TSMC’s foothold in the U.S. market and enhance NVIDIA’s production capabilities. The Arizona plant, supported by significant U.S. government funding, also serves major clients like Apple and AMD, indicating a growing trend of semiconductor giants increasing their presence in the U.S.
Advanced manufacturing capabilities
TSMC’s Arizona facility represents a significant manufacturing advancement, built with a $40 billion investment [6]. The plant will utilize an improved 4-nanometer process to produce NVIDIA’s Blackwell chips [2], which contain an impressive 208 billion transistors [6]. These processors are designed to be 30 times faster at AI-related tasks compared to previous generations [2][3][5].
Production timeline and challenges
The first Arizona plant is scheduled to begin volume production in the first half of 2025 [2][3]. However, the project faces a technical limitation as all CoWoS (Chip on Wafer on Substrate) capacity remains in Taiwan [5]. This means the chips must return to Taiwan for final packaging [1][2], adding complexity to the manufacturing process.
Government support and expansion plans
The U.S. government has provided substantial support, with TSMC receiving $6.6 billion in direct federal funding [1][6]. The company plans to construct three facilities in Phoenix, with the second plant scheduled for 2028 and the third by 2030 [2][3]. This expansion includes an additional $5 billion in loans from the CHIPS Act [2].
Market positioning and partnerships
The Arizona facility has already secured partnerships with major tech companies, including Apple and AMD [5]. NVIDIA’s Blackwell chips have experienced high demand from customers involved in generative AI and accelerated computing [5]. Despite initial setbacks including design issues and server rack problems earlier this year [2][3], these challenges have reportedly been resolved.