AMD will produce high-performance chips at TSMC's new factory in Arizona, becoming the factory's second important customer after Apple. Independent reporter Tim Culpan reported that sources close to the matter confirmed the agreement today, but TSMC declined to comment.
TSMC's Fab21 factory near Phoenix, Arizona, has begun trial production on its 5-nanometer node, a family of process nodes that includes the N4/N4P/N4X and N5/N5P/N5X processes. Although the first phase of production has not yet been fully launched, Apple's A16 Bionic chip is currently being produced at Fab21 using the N4P process. The A16 Bionic chip, which has been available since mid-2022, is an excellent manufacturing test for the young fab, which has already produced "a small but significant number" of chips for a variety of Apple products. Bloomberg reported last month that Fab21’s current yield is similar to that of TSMC’s factories in Taiwan.
However, the chips AMD plans to produce at Fab21 are currently unclear. Production is currently in the planning stages, with tapeout and manufacturing of the chips expected to begin in Arizona next year, sources said. The first phase of Fab21 is limited to N4 and N5 technologies, which rules out the possibility of any newer consumer chips than RDNA3 and Zen4.
AMD's CDNA3 series of enterprise-grade AI chips (used in the InstinctMI300 series of accelerators) is probably the most likely choice. The MI325X, scheduled to be released in the fourth quarter of 2024, is based on the N4 node, while the upcoming MI350 will use TSMC’s N3 process. Arizona may become the manufacturing site for the MI325X after initial production is completed. This is just speculation, though; AMD may also decide to produce yet-to-be-announced AI or mobile chips at Fab21.
AMD's high-performance computing (HPC) chips manufactured in Arizona initially had to be shipped overseas for packaging. However, Amkor and TSMC recently reached an agreement to jointly develop advanced packaging operations in Arizona, which will further consolidate the domestic AI chip supply chain in the United States. Amkor Technology is building a $2 billion chip testing and packaging facility in Arizona, which is expected to start production as early as 2026. The facility will be approved to use TSMC's patented CoWoS and InFO packaging technologies, allowing AI and HPC chips to be more completely packaged in the United States. In particular, graphics processing units (GPUs) rely on CoWoS technology to interface with their high-bandwidth memory (HBM) chips. Amkor Technology already counts TSMC TV as its main customer when building its Arizona factory, but being able to work with CoWoS technology still surprises many.
AMD's potential agreement with TSMC is of great significance to both U.S. interests and TSMC. Since 2023, various problems encountered during the construction process of TSMC's Arizona factory (mainly labor disputes between American and Taiwanese workers and management) have been in the spotlight. Recent Apple production yields and today's AMD news will greatly enhance confidence in Fab21. The huge financial support provided by the United States to Fab21 ($6.6 billion in grants and up to $5 billion in loans) also appears to be well rewarded, as AMD and TSMC will be the pioneers in establishing a solid AI/HPC chip production supply chain in the United States.