Apple, AMD, and Nvidia accelerate TSMC’s US chip expansion

Article by Gadjo Sevilla | Dec 2, 2022

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.

TSMC can more quickly reap the benefits of government incentives and the $52 billion Chips and Science Act.
This could help TSMC compete more closely with Samsung, which announced mass production of its first-generation 3nm chips in July, with plans to start production in 2023.

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.