The news: TSMC plans to ramp up production of high-end 3-nanometer chips at its Arizona factory in a decision that backs the US in the tech cold war with China, per TechCrunch.
Why this matters: TSMC is the world’s largest chipmaker by volume and is responsible for fabricating 92% of chips designed by US semiconductor companies, per Stimson.
- TSMC’s 3nm tech, called N3, will be a full node stride from its 5nm technology and offer up to 70% logic density gain, up to 15% speed improvement at the same power, and up to 30% power reduction at the same speed when compared to its predecessor.
- Founder Morris Chang said that the company will fab 5nm chips and later transition to 3nm processors.
- 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 plans to initiate production in 2024, but development for TSMC’s 3nm chips are slated to start this year.
- The race to 3nm is well underway. Samsung announced mass production of its first-generation 3nm chips in July, with plans to start production in 2023.
The opportunity: We’re starting to see momentum stemming from President Biden signing the Chips Act into law at a time when the US and various chipmakers’ relationships with China remain volatile.
- The uncertainty brought about by the tech cold war between countries is still going strong despite recent diplomatic attempts from its leaders.
- Chipmakers like TSMC can leverage existing US incentives and establish partnerships with American companies.
- Companies like Apple, one of TSMC’s biggest customers, can accelerate plans to move production out of China and bring component production closer to home.
- TSMC’s commitment to its American fabs could be the inflection point for competitors on the fence about choosing future plant locations.
What’s the catch? Chipmakers could be running out of time to take advantage of the $52 billion in subsidies from the Chips Act, but the current economic downturn could make it difficult to commit to future US fabs.