Apple, Nvidia to be first customers of TSMC’s US chip plant
Published on: Monday, December 05, 2022
By:
Nikkei, FMT
TSMC plans to more than double the capacity of the advanced 3-nm technology chips. (TSMC pic)
TAIPEI: Apple and Nvidia are set to be two of the first customers for Taiwan Semiconductor Manufacturing Co’s new plant in Arizona, which is slated to begin making some of the world’s most advanced chips as early as the end of next year.
Apple will be the most important first-wave customer when the plant begins production, sources briefed on the matter told Nikkei Asia, with Nvidia likely to follow suit, they added.
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Other top US chip developers including Advanced Micro Devices (AMD) and Xilinx – the world’s top programmable chip developer which AMD acquired in a US$35 billion deal – are also in talks to buy output from the world’s largest contract chipmaker’s first cutting-edge plant in the US.
This latest development between TSMC and top American chip developers marks a victory for Washington in its push to onshore vital semiconductor production. Further underscoring the importance of TSMC’s new plant to US chip ambitions, President Joe Biden will attend a ceremony on Tuesday marking the installation of the first equipment at the facility.
TSMC originally planned to produce 20,000 wafers a month in Arizona, but it now aims to double that capacity and make even more advanced chips there, sources told Nikkei.
The original plan was to make chips using the 5 and 4-nanometer process technology that TSMC currently uses to produce processor chips for the iPhone 14 and iPhone 14 Pro.
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Under the new plan, the Arizona plant will eventually make a further 20,000 wafers a month using 3-nm technology. In general, the smaller the nanometer size, the more advanced the chip.
Investment for the 3-nm expansion could be larger than the US$12 billion TSMC is investing in the first phase of the plant, the sources said but added that capacity will be further adjusted according to customer needs.
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Nanometer refers to the width between transistors on a chip. The smaller the size, the more transistors can be squeezed onto the same size chip. Currently, only TSMC, Samsung and Intel produce or are attempting to produce such advanced chips.
Meanwhile, President Biden and US Commerce Department secretary Gina Raimondo have confirmed they will attend TSMC’s tool move-in event in Arizona on Tuesday.
In the chip industry, a tool move-in event signals that the installation of essential equipment has begun. In this case, it is also a chance for TSMC to show that its commitment to the US to build chip capacity onshore is on track.
After the equipment is installed, it can take up to a year for production lines to be qualified and production ramped up, industry executives told Nikkei.
TSMC founder Morris Chang, chairman Mark Liu and CEO C.C. Wei will also attend the event, along with top executives from Apple, Nvidia, AMD, Arm and Synopsys, as well as top management from leading chip equipment makers Applied Materials, Lam Research and others.
The collective market cap of companies expected at the ceremony is about US$4 trillion, making it one of the most important semiconductor industry gatherings in the post-pandemic era.
TSMC first planned the tool move-in for around September but it was delayed due to labour shortages and Covid, Nikkei earlier reported. With the ceremony pushed back to December, the massive task of installing equipment will start in February or March 2023, sources told Nikkei.
TSMC founder Chang has confirmed that TSMC will bring the latest 3-nm chip production to the US but also said that manufacturing in the US will be 50% more expensive than in Taiwan. TSMC’s current production base for 3-nm chips is in the southern Taiwanese city of Tainan, where production using the technology only recently began.
Samsung and Intel are also massively expanding chip production footprints in the US. Samsung is building a US$17 billion chip facility in Texas, while Intel is constructing a new US$20 billion plant in Arizona and another US$20 billion plant in Ohio.
Charles Shi, a semiconductor analyst with Needham & Co, said TSMC should put a higher priority on its new plants and expansions in Arizona and Japan.
“TSMC will definitely face some pressure to diversify the production from Taiwan,” Shi told Nikkei. “I think TSMC’s customers will first and foremost ask TSMC to build capacity outside of Taiwan to at least diversify the geographical footprint.”
“TSMC needs to seriously address this issue,” he added. “It’s not the most ideal situation in terms of cost and efficiency for TSMC, but we now live in a less-ideal world from a geopolitical perspective.”
TSMC, Nvidia, AMD and Xilinx declined to comment on this story. Apple did not respond to requests for comment.
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