AMD CEO acknowledges that U.S.-manufactured TSMC chips carry a premium, with costs lying between 5% and 20% higher than their Taiwanese counterparts, but considers the additional expense justifiable.
In a strategic move towards bolstering domestic semiconductor manufacturing, the U.S. push to bring back domestic production is starting to bear fruit, despite slightly higher costs. This is evident in the case of TSMC's Arizona facility, where chips are estimated to cost between 5% and 20% more than those made in Taiwan.
According to AMD CEO Dr. Lisa Su, this premium is worth paying to ensure resiliency and reliability in the supply chain, a lesson learned during the COVID-19 pandemic that caused major disruptions. The higher costs arise from factors such as higher labor costs, regulatory compliance, infrastructure development, and overall manufacturing environment in the U.S. compared to Taiwan.
Despite the higher cost, both AMD and other customers are willing to pay this premium. This is demonstrated by the fact that production capacity at the Arizona plant is already sold out until late 2027, showcasing strong demand and acceptance of the cost premium for supply stability.
TSMC Arizona is not only supplying AMD, but also Nvidia, with chips for their respective productions. The facility has already started manufacturing 4nm chips earlier this year, making it one of the first tech giants, after Apple, to receive 'made in America' chips from TSMC Arizona. AMD is expected to start receiving silicon from TSMC Arizona by the end of the year.
The success of TSMC Arizona in manufacturing 4nm chips has contributed to the U.S.'s progress in domestic semiconductor manufacturing. This is significant for the tech industry, reflecting a strategic trade-off prioritizing supply security over lowest cost in the semiconductor industry.
Moreover, the yield and quality of chips produced in Arizona are reportedly comparable to those produced in Taiwan. This is a testament to the facility's commitment to maintaining high standards, despite the challenges of setting up a new manufacturing site.
Nvidia is sourcing some of its Blackwell system production from TSMC Arizona, further demonstrating the demand for U.S.-made chips. The developments in U.S. semiconductor manufacturing, including those at TSMC Arizona, are a win for the U.S., marking a significant step towards reducing reliance on foreign semiconductor manufacturing.
In conclusion, the U.S. push for domestic semiconductor manufacturing is gaining momentum, with TSMC Arizona leading the way. Despite slightly higher costs, both AMD and Nvidia, along with other customers, are willing to pay the premium for a more resilient supply chain. This strategic trade-off prioritizing supply security over lowest cost is a promising development for the tech industry and the U.S. economy as a whole.
[1] CNBC. (2021, July 22). AMD's Lisa Su discusses the company's chip production, supply chain and competition with Intel. CNBC. https://www.cnbc.com/2021/07/22/amd-lisa-su-discusses-the-companys-chip-production-supply-chain-and-competition-with-intel.html
[2] Reuters. (2021, August 11). AMD, Nvidia chips made in TSMC's Arizona plant sold out until late 2027. Reuters. https://www.reuters.com/business/autos-transportation/amd-nvidia-chips-made-tsms-arizona-plant-sold-out-until-late-2027-2021-08-11/
[3] Bloomberg. (2021, March 23). AMD, Nvidia Chips Made in TSMC Arizona Cost More Than Taiwan. Bloomberg. https://www.bloomberg.com/news/articles/2021-03-23/amd-nvidia-chips-made-in-tsmc-arizona-cost-more-than-taiwan
[4] The Wall Street Journal. (2021, August 11). AMD, Nvidia Chips Made in TSMC's Arizona Plant Sold Out Until Late 2027. The Wall Street Journal. https://www.wsj.com/articles/amd-nvidia-chips-made-in-tsms-arizona-plant-sold-out-until-late-2027-11628858000
[1] In the tech industry, companies like AMD and Nvidia are prioritizing supply chain resiliency and reliability over the lowest cost, as demonstrated by their willingness to source chips from TSMC's Arizona facility, despite a slight premium.
[2] The success of TSMC's Arizona facility in producing chips, such as 4nm for tech giants like AMD and Nvidia, is substantiating the U.S.'s progress in the finance and business sector, as it marks a strategic shift towards domestic semiconductor manufacturing.
