Nvidia plans to make Blackwell AI chips in Arizona amid rising tensions with Taiwan

In a move to bolster its production capabilities, Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC) are looking into the mass production of Blackwell artificial intelligence chips at TSMC's Arizona facility. This decision is primarily driven by the need to mitigate the risks associated with shipping products from Taiwan amidst rising geopolitical tensions, particularly due to ongoing threats from China regarding Taiwan. Currently, TSMC has been producing these Blackwell chips in Taiwan, where its chip-on-wafer-on-substrate capacity is established but subsequently faces logistical hurdles in shipping those chips back for packaging. The push to manufacture in Arizona is notable as it marks Nvidia's effort to create more local production pathways for its semiconductor needs. This innovation comes at a time when both companies are under pressure to maintain and expand their production capacity, given the increasing demand for AI technology and chips. Notably, TSMC already caters to major customers like Apple Inc and Advanced Micro Devices, which showcases its capability in handling high-profile productions. By focusing on a US-based production facility, Nvidia aims to safeguard its business interests against the backdrop of increasing geopolitical instability in the region. Mass production of the Blackwell chips is anticipated to commence in early 2025, which aligns with the semiconductor industry's broader aspirations to ramp up production amidst global supply chain challenges. There have been concerns regarding Nvidia's production capabilities and previous challenges associated with the Blackwell chips that could hinder companies like Amazon Web Services. Furthermore, Oppenheimer analyst Rick Schafer estimated that Nvidia could see several billion dollars in revenue from Blackwell in the upcoming quarters, indicating strong investor confidence in the potential and profit from this venture. As Nvidia's stock price has surged significantly over the past year, this partnership with TSMC not only signifies a strategic pivot in their operational framework but also reflects a larger trend in the semiconductor industry towards localized production. As companies like Amazon also enter the AI chip market, responding to Nvidia's competition will be crucial, emphasizing the importance of this new manufacturing strategy in Arizona for Nvidia's future.