TSMC's plans to upgrade its existing chip plant in Arizona to 4nm technology (opens in new tab) and add a second plant to produce 3nm silicon were officially announced following yesterday's announcement event (opens in new tab), which was also attended by President Biden. This new commitment will triple TSMC's investment in Arizona to $40 billion. And yes, it is a time to rejoice.

Both AMD and Nvidia are expected to produce chips at the new facility, bringing GPU production back to the US for the first time in decades. However, it is not clear which specific GPUs will be produced.

TSMC originally announced the Arizona facility in 2020, and yesterday's announcement was made at the partially completed plant, with President Biden in attendance and delivering the speech, "American manufacturing is back, folks (opens in new tab)."

Initially, TSMC planned to manufacture 5nm node chips at the new Arizona plant. The facility is now scheduled to be operational in 2024, about four years after TSMC first began manufacturing 5nm chips, including the M1 processor for Apple's Mac computers. TSMC now says that initial production will also support the 4nm node, which is not a true process shrink but rather a 5nm scaling down.

Perhaps more significant news is the announcement of a second plant that is already under construction and will support 3nm production technology. This second Arizona plant is expected to begin production in 2026.

How the new fab fits into AMD and Nvidia's plans remains to be seen; Nvidia CEO Jensen Huang has described the Arizona fab as "a game-changing industry development," and AMD President Lisa Su said, "AMD is expecting TSMC Arizona We expect to be a significant user of the plant and look forward to producing the highest-performing chips in the U.S." a bit more clearly.

While it would be safe to conclude that both companies will use the plant at least to some extent, it is debatable whether either can be expected to produce state-of-the-art silicon in Arizona in the short to medium term.

Nvidia's latest RTX 40 series GPUs (open in new tab) use TSMC's 4nm node, while AMD's Radeon RX 7000 series (open in new tab) uses TSMC's closely related 5nm technology. Both have been launched in recent months, and the general expectation is that their successors will be available in late 2024. Timing-wise, this coincides with when the first Arizona plant comes online.

However, we also expect these new GPUs to migrate to TSMC's 3nm node. However, according to TSMC's current plans, 3nm production in the US will not take place until 2026. Therefore, it is unlikely that Nvidia will be manufacturing RTX 50 series GPUs in Arizona in 2024; the same goes for the supposed AMD Radeon RX 8000 series boards.

However, the use of chiplets could make it possible to stick to 5nm and 4nm for next-generation GPUs in late 2024. For now, however, it seems more likely that AMD and Nvidia will both go for 3nm.