TSMC likely to start NVIDIA's AI chip production in Arizona soon

TSMC has been a hot topic in the tech industry lately. The US government recently finalized $6.6 billion in grants for the chip maker. Now, an exclusive report from Reuters suggests that TSMC is in talks with NVIDIA for AI chip production in Arizona.

TSMC will likely start the production of NVIDIA’s Blackwell AI chips in Arizona

Multiple sources familiar with the matter told Reuters that TSMC will produce the Blackwell AI chips for NVIDIA in its Arizona fab. In fact, the company is already preparing for the production early next year.

Reports from late November hinted that TSMC is ready to mass-produce the 2nm chips in 2025. Those reports also mentioned that the chip maker could get orders from NVIDIA and others. Now, it seems to be finally happening.

NVIDIA launched the Blackwell AI chips in March this year. TSMC has been manufacturing these chips in its fab facilities based in Taiwan. However, the latest decision from NVIDIA comes due to the high demand for the chip from users involved in generative AI (GenAI) and accelerated computing.

TSMC will reportedly only produce the front-end process of the Blackwell AI chips in its Arizona fab. The chips will then be shipped back to Taiwan for packaging, though. That’s because TSMC’s facility in Arizona doesn’t have the chip-on wafer-on substrate (CoWoS) capacity which is reportedly vital for NVIDIA’s AI chips.

The agreement isn’t finalized yet

All that said, the agreement between the two companies isn’t final just yet. When it’s finalized, TSMC will have yet another customer for its Arizona fab. TSMC’s Arizona fab will play a vital role in semiconductor manufacturing for the US.

The decision to produce the 2nm chips locally aims to reduce the country’s reliance on overseas suppliers. Although the US government is working with the chip maker to achieve this goal, it has been keeping a closer eye on TSMC’s business dealings.