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

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.

This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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