Nvidia Could Relocate Blackwell Production to Arizona, a Boost for US Chip Manufacturing

Key Takeaways

• Nvidia is reportedly in advanced talks with Taiwan Semiconductor Manufacturing Company (TSMC) to relocate Blackwell production to Arizona.
• The advanced AI chips are currently manufactured in Taiwan.
• Winning the Nvidia contract would be a significant victory for the new facility, which is expected to start mass production in the first half of 2025.

Next year, Taiwan Semiconductor Manufacturing Company (TSMC) is expected to begin producing microchips at its new facility in Phoenix, Arizona.

As the company prepares to launch operations at its first U.S. location, TSMC is reportedly in discussions with Nvidia about manufacturing its highly sought-after Blackwell GPUs there.

TSMC’s American Adventure

First announced in 2020, TSMC Phoenix represents a new era of American expansion for the Taiwanese chipmaker.

While not the first to be built in the U.S. (that title goes to TSMC Washington), the new factory will be the first in the country equipped for the five-nanometer manufacturing process.

Meanwhile, a second plant expected to be completed in 2028 and a third just recently announced , will house cutting-edge three- and two-nanometer technology.

By the time the three fabrication plants are up and running, TSMC will have invested $65 billion into its Arizona operations.

The massive investment, which has provided a huge boost to the state’s economy, has been fleshed out with generous subsidies from the CHIPS Act, including tax incentives and $6.6 billion in direct funding.

Nvidia to Relocate Production

While TSMC has produced components for Nvidia in Washington in the past, modern AI processors require more advanced manufacturing setups. As a result, Nvidia has outsourced production to better-equipped locations in Taiwan and South Korea.

However, as reported by Reuters on Dec. 5, TSMC is in advanced talks to produce Nvidia’s Blackwell chips at the new facility and is already making preparations to start production early next year.

So far, the AI chips have been manufactured exclusively at TSMC’s plants in Taiwan. But given that so many of Nvidia’s data center customers are based in the U.S., relocating to Arizona makes a lot of sense.

Amid uncertainty around the scope of Donald Trump’s expected tariff regime, moving production to the U.S. could also provide a significant buffer against any subsequent supply chain shock.

Made-in-America Semiconductors

The success of TSMC Phoenix and Nvidia’s plan to relocate Blackwell production to the U.S. represents the culmination of years of geopolitical wrangling over semiconductor manufacturing.

Even before President Biden made the issue a priority on national security grounds, industry voices had been calling for actions to shore up domestic production and reduce American firms’ reliance on Asian semiconductor fabrication plants.

Post-pandemic efforts to build more resilient supply chains have seen a resurgence of interest in American manufacturing, extending from AI chips to Bitcoin mining equipment and beyond.