The news: TSMC is skipping to the next generation of high-performance processors to be built in its Arizona plant at the request of Apple, Nvidia, and AMD, per Bloomberg.
Why it’s worth watching: We recently reported that TSMC planned to start producing 5nm chips and later transition to 3nm processors. That has changed thanks to requests to produce more-advanced 4nm chips starting in 2024.
- TSMC is expected to announce the new plan when President Biden and Commerce Secretary Gina Raimondo visit the Phoenix construction site Tuesday.
- TSMC’s first advanced chip plant in the US was slated to be completed in September, but the open date has been pushed back to March 2023 due to a labor shortage.
- The company is planning to add another plant nearby to produce 3nm chips in the future.
What this means for TSMC: The chipmaker can accelerate innovation and essentially skip a generation of 5nm chips, transitioning from 4nm to 3nm production in half the time.
What this means for Apple, Nvidia, and AMD: These companies can secure future production of chips necessary for their various devices. This level of control will help Apple and others transition away from China.
- Foxconn’s “iPhone City” factory was the flashpoint of weeklong anti-government protests that spread throughout China.
- Unrest in the manufacturing hub led to a shortfall of 6 million iPhone Pro units, which will lower profits significantly in Q4, traditionally Apple’s busiest season.
- TSMC’s move to Arizona could set a precedent for other tech suppliers to diversify production to the US and ensure long-term business partnerships.
- The chipmaker said that it would produce 20,000 wafers monthly at the Arizona facility and that Apple will use about a third of the output. Nvidia and AMD will likely increase orders.
What this means for the Biden administration: The news is a big win for proponents of the Chips and Science Act and could entice more manufacturers to participate in incentives, while they last.
- The production of high-performance chips in Arizona will further widen the gap between the US and China in the tech cold war.
- TSMC’s commitment helps fulfill the Biden administration goal of bringing manufacturing jobs to the US.