nvidia considers us manufacturing for blackwell ai chips

2024-12-06 nvidia

United States, Friday, 6 December 2024.
Nvidia is exploring a significant shift in its production strategy by potentially manufacturing its Blackwell AI chips in the United States. This move could reshape Nvidia’s supply chain and stock value, reflecting broader trends in the semiconductor industry. Currently, Nvidia’s Blackwell chips are produced by Taiwan Semiconductor Manufacturing Co. (TSMC) in Taiwan. However, TSMC is preparing to begin production at its Arizona facility, with plans to start next year. This decision aligns with U.S. efforts to boost domestic semiconductor production amid geopolitical tensions. Nvidia’s consideration to produce domestically could facilitate easier distribution to major clients like Microsoft, Oracle, and OpenAI. Elon Musk’s xAI is also a significant buyer, planning to invest $9 billion in these chips. While initial overheating issues with the chips have been addressed, the production shift could enhance Nvidia’s market position against competitors.

Manufacturing shift details

TSMC is preparing to commence Blackwell chip production at its Phoenix facility in early 2025 [4][5]. The Arizona plant represents a $65 billion investment and will be the first U.S. facility equipped for five-nanometer manufacturing [5]. This strategic move comes with a notable constraint - the chips will still require shipping to Taiwan for final packaging using chip-on-wafer-on-substrate (CoWoS) technology, as this capability remains exclusive to TSMC’s Taiwan facilities [2].

Market implications and demand

Nvidia’s Blackwell chips command premium pricing, with the B100 GPUs ranging from $30,000 to $35,000 and GB200 Superchips reaching $60,000 to $65,000 [1]. Server cabinets containing these chips are priced between $1.8 million and $3 million [1]. Oppenheimer analyst Rick Schafer projects substantial revenue potential, with estimates suggesting between 5 and 6 million Blackwell GPUs will be produced in 2025 [6].

Industry positioning and competition

The move to U.S. manufacturing could strengthen Nvidia’s market position, particularly as competition intensifies with Apple’s chip purchases from Amazon Web Services [1]. The Blackwell chips, unveiled in March 2024, offer significant performance improvements, operating 30 times faster than previous generations in specific tasks [2]. TSMC’s Arizona facility already counts Apple and AMD among its customers [4], indicating growing momentum in U.S.-based semiconductor production.

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Nvidia manufacturing