Arizona Governor Discusses Advanced Chip Packaging Talks with TSMC, Aiming to Boost US Manufacturing

In Taipei on Tuesday, Arizona Governor Katie Hobbs said that TSMC and state officials are discussing adding advanced chip packaging capability to TSMC's US factory.

Governor Hobbs is a member of a larger US delegation in talks with authorities and businesses about Taiwan's crucial position within the semiconductor supply chain, according to Bloomberg.

According to Under Secretary of Commerce Laurie E. Locascio, this historic discussion is the first time the United States has spoken with TSMC about research and development to bring more of the technology from the biggest contract chipmaker in the world onshore.

Addressing The High Demand

The urgent demand for cutting-edge chip packaging solutions has hampered the production of highly sought-after silicon goods, such as the artificial intelligence accelerators made by TSMC for Nvidia Corp. The difficulty was recognized by TSMC Chairman Mark Liu, who said that although the business is dedicated to increasing Taiwan's packaging capacity, supplies are anticipated to be limited for a further 18 months.

Anirudh Devgan, chief executive officer of Cadence Design Systems Inc., stressed during a speech at the Semicon conference earlier this month that packaging will be a crucial area of conflict for countries looking to take the lead in the tech industry.

TSMC has committed to Arizona with two fabs and a whopping $40 billion in investment so far. These facilities may have the option to add cutting-edge packaging capabilities, which might improve Arizona's semiconductor manufacturing capacity even further.

In response to a request from one of its major clients, Apple Inc., TSMC confirmed its intentions to provide more sophisticated 4-nanometer chips from its Arizona factory in December.

Arizona Facility Issues

According to a recent report from The Information, the Arizona factory will have a small effect on making the US self-reliant on chips. TSMC engineers and former Apple workers told that many complex chips built in Arizona for Apple or other clients like Nvidia, AMD, and Tesla would still need packaging in Taiwan.

Due to its complexity, TSMC's Taiwan factories are now the only ones that can do packaging, a technical process that involves the tight arrangement of numerous circuit boards before encapsulating them into a single chip.

Last year, the US CHIPS Act, which encouraged chipmakers to develop American operations to boost the economy and create employment, was touted as a success. Apple proudly declared it will acquire American-made processors for select products.

However, this factory can only create bigger process chips for earlier Apple devices, according to 9 to 5 Mac. TSMC wanted more subsidies and less restrictions. The project is behind time and over budget, with production delayed until 2025 from 2024.

While Governor Hobbs suggested that things could change in this area, several industry watchers are still unsure of the details and potential effects of these discussions.