AMD CEO Lisa Su recently revealed that sourcing AI chips from TSMC’s U.S. plants comes at a 20% higher cost, drawing attention to the challenges of building supply chains in the U.S.
Despite significant growth in TSMC’s U.S. operations, the venture remains expensive, especially when compared to production in Taiwan. This price hike was shared by Lisa Su during an AI event in Washington, as reported by Bloomberg.
TSMC’s U.S. expansion, fueled by the Trump administration’s push for domestic chip production, marks a dramatic shift in the American semiconductor landscape. Before TSMC’s involvement, the U.S. chip supply chain was practically non-existent, with Intel being the only company capable of meeting the demand for cutting-edge chips. However, with TSMC’s Arizona facility now up and running, U.S. production is booming, albeit at a significantly higher cost.
Manufacturing chips in the U.S. comes with numerous challenges. Expensive labor, high costs for importing equipment, and the immature nature of the U.S. chip supply chain contribute to the inflated prices. Despite these obstacles, companies like AMD and NVIDIA are still opting for U.S.-sourced chips, as the demand for advanced nodes from TSMC’s Taiwan plants exceeds capacity. As a result, clients are paying between 5% to 20% more to source chips from the U.S. rather than Taiwan.
AMD, one of TSMC’s largest clients, has been among the first to place orders for 4nm chips from TSMC’s Arizona facility, with plans to scale up to 2nm chips for its EPYC Venice data center CPUs. Lisa Su emphasized that demand for AI chips is growing at an unprecedented rate, with partners placing orders at record speeds. She projects that the accelerator market will reach a staggering $500 billion in the next five years.