TSMC's Troubled Arizona Fab Gets Vote of Confidence From AMD

AMD
(Image credit: AMD)

TSMC had to postpone the production start at its Fab 21 in Arizona due to delays with equipment installation and various workforce-related issues. However, the foundry's loyal customers, such as AMD, still endorse it partly because they need to produce some of their chips in the U.S. and partly because they want to diversify their supply chain. AMD re-emphasized today that it will be one of the early adopters of TSMC's Fab 21 when it comes online in 2025.

"When you when you think about the geopolitical situation, geographic diversity is important to us," said Lisa Su, chief executive of AMD, at the Goldman Sachs 2023 Communacopia and Technology Conference. "So, the Arizona factory is very important to us. We are going to be one of the early users, we are putting our first tape outs in shortly with the idea of being a significant user of Arizona. I think we will continue to look at the geographic diversity as an important piece of it."

All of AMD's key products — including CPUs, GPUs, DPUs, and FPGAs — are made by TSMC in Taiwan. Although TSMC has proven to be an extremely reliable manufacturing partner for tech giants like AMD, Apple, Intel, Nvidia, and Qualcomm, geopolitical tensions mean increased risks. As a result, it is unsurprising that TSMC's intention to build a fab in Arizona was welcomed by all of its U.S.-based clients and the U.S. government, as it wants chips that will be used for its critical applications and military equipment to be made in America.

TSMC began building its Fab 21 phase 1 in April 2021 and hoped to start making chips there in early 2024. However, the delays in equipment move-in forced TSMC to change its plans, and it now expects to begin production at the facility sometime in 2025.

The repercussions of this delay on TSMC's U.S. clients remain uncertain. In theory, TSMC could redirect orders from U.S.-based firms such as Apple, AMD, and Nvidia to its Taiwanese fabs, which are equipped to mass-produce 5 nm-class chips (N5, N5P, N4, N4P, and N4X.). However, there are worries that these Taiwanese fabs could be filled with orders in 2024, making it harder for TSMC to produce everything it plans. Moreover, companies like AMD and Nvidia might have agreements to manufacture certain products for the U.S. government domestically, and a year-long delay might breach such contracts.

While this situation increases AMD's risks, the company remains optimistic and hasn't indicated whether it has "plan B."

"I think we have gotten extremely good at managing supply chain, so I would say that is one of our core strengths," Su added. "TSMC has been a phenomenal partner for us in terms of advanced technology, both on the silicon side as well as the packaging side, and we very much value that relationship."

 

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • bit_user
    They were also rumored to be buying capacity at Samsung (I thought it was more than a rumor that they bought some wafers on an old node?), but recently denied it:
    https://www.tomshardware.com/news/lisa-su-swats-down-samsung-foundry-rumors-we-work-with-tsmc
    I wonder if TSMC is giving them a better deal, as long as they remain an exclusively-TSMC customer.
    Reply
  • umeng2002_2
    Troubled is hardly the right description. The fact that these fabs work at all is a small miracle. Anyone in engineering or research knows that something hardly works and is "troubled" until it does work and is finally released.
    Reply
  • bit_user
    umeng2002_2 said:
    Anyone in engineering or research knows that something hardly works and is "troubled" until it does work and is finally released.
    Eh, when a project is mismanaged, the resulting product usually has serious deficiencies, if/when it does finally ship. Hopefully, TSMC's quality control will prevent these lines from going into full production until they meet the standards achieved by their other fabs.

    "Troubled" isn't always a necessary or inevitable phase you have to go through, especially since TSMC isn't even setting up a leading edge node, there. Since it's a generation behind, it should be just replicating what they've done in Taiwan.
    Reply
  • umeng2002_2
    Even well ran projects have all sorts of hurdles.
    Reply
  • gdmaclew
    When you when you think?
    A little proof reading goes a long way.
    Reply
  • Tom Sunday
    With most all of AMD's key products made by TSMC on the island of Taiwan, AMD’s endorsement to produce some of their chips in the U.S comes not as a surprise. Especially given the bleak future of the much bigger international political climate and which is not going away anytime soon. Taiwan is also not allowed to be a member of the United Nations as it along with the United States only recognizes the People's Republic of China as the legitimate government of China, and does not recognize Taiwan as a sovereign state.

    TSMC is now seeking $15 billion in U.S government aid and an additional estimated $8 billion in federal tax breaks and for a foreign industry that expects gross profits of more than 50%. Congressional leaders here in turn noted: “The U.S. doesn't want to see itself in a situation where it is hostage to Chinese control of such a critical industry and we've been delinquent and we've been remiss in letting our capacity and capability decline.”

    House member Anna Eshoo, who worked on the legislation aid, said: “We must win this global competition as we are in fierce competition with China and thus must keep things all American! It also tackles our national security issues which she views as ultra-pressing, and sends a signal that America must be first when it comes to chip manufacturing and technology.” Thus many ‘on the Hill’ seemed to be more inclined in giving Intel the better deal and priority than TSMC any day, as Senators here are clearly now poised towards the 2024 election and votes in their pocket, and per Eshoo’s given keynote speech underscoring that this is what the American people would want. Food for thought!
    Reply
  • bit_user
    Tom Sunday said:
    the United States only recognizes the People's Republic of China as the legitimate government of China, and does not formally recognize Taiwan as a sovereign state.
    Fixed that, for you. We can't get into details, but it's a delicate dance and formal recognition wouldn't positively impact the situation - least of all, right now.
    Reply
  • bit_user
    Tom Sunday said:
    the question always abounds which of these companies presents the better long term investment given the volatility in the market and in the world! Thank You for your response!
    No one should heed my investment advice. I do wonder if it's even possible for the average US citizen to invest in TSMC. There's probably some way to trade on your expectations of them, but whether it makes financial sense is really the kind of question you'd want to take to a different forum.
    Reply
  • Co BIY
    Tom Sunday said:
    For many Tech Bro’s like me the question always abounds which of these companies presents the better long term investment given the volatility in the market and in the world! Thank You for your response!

    Arguably the two best companies in the world, both extremely well run and in the most important markets with nearly unlimited growth opportunities.

    Own both.

    The real major downside could be that the value is already recognized and they are overpriced. The challenge of investing is that the best company in the world is often a mediocre investment.
    Reply