TSMC upgrades Arizona fab to 3nm but high-end GPU production still unlikely

TSMC's plans to upgrade its existing chip fab in Arizona to 4nm tech, and add a second fab at the facility producing 3nm silicon, are now official following a launch event yesterday attended by none other than President Biden. All told, the new commitments will triple TSMC's investment in Arizona to $40 billion. And, yes, it is time to rejoice.

Both AMD and Nvidia are expected to produce chips at the new facilities, bringing GPU production back to US soil for the first time in decades. Exactly which GPUs, however, isn't clear.

TSMC originally announced the Arizona facility back in 2020 and yesterday's announcement was made at the partially completed factory with President Biden in attendance and speechifying that, "American Manufacturing is back, folks." 

Originally, TSMC planned to make chips based on its 5nm node at the new Arizona plant. The facility is now slated to come online in 2024, some four years after TSMC first started making 5nm chips, including Apple's M1 processors for its Mac computers. TSMC now says that initial production will also support its 4nm node, which is a refinement of 5nm rather than a true process shrink.

Arguably, the bigger news is the announcement of a second fab already under construction and being fitted out for 3nm production technology. This second Arizona fab is scheduled to begin production in 2026.

Exactly how the new fabs will fit into AMD and Nvidia's plans is yet to be seen. For what it's worth, Nvidia CEO Jensen Huang described the Arizona fabs as a, "a game-changing development for the industry," while AMD head honcho Lisa Su was a bit more explicit saying, "AMD expects to be a significant user of the TSMC Arizona fabs and we look forward to building our highest performance chips in the United States."

If it's safe to conclude that both companies will use the plants to at least some extent, but it's debatable whether we can expect either to produce cutting-edge silicon in Arizona in the short to mid term.

Nvidia's latest RTX 40 Series GPUs use TSMC's 4nm node, while AMD's Radeon RX 7000 series are on TSMC's closely related 5nm tech. Both launched in recent months and typical expectations would see replacements arrive in the second half of 2024. Timing wise, that lines up with the first Arizona plant coming online.

However, we would also expect those new GPUs to move to TSMC's 3nm node, which will by then be roughly two years old. However, according to its current plans, TSMC will not be offering 3nm production in the USA until 2026. So, it's hard to imagine the Nvidia cranking out RTX 50 Series GPUs in Arizona in 2024. That goes for any putative AMD Radeon RX 8000 Series boards.

It's just possible that the use of chiplets could make sticking with 5nm and 4nm for the next generation of GPUs in late 2024 viable. But for now it seems more likely that AMD and Nvidia will both go for 3nm, which at that. stage will only be available from TSMC's Taiwan fabs.