TSMC Achieves Over 90% Yields on 2nm Process, Arizona Facility Nearing Full Capacity with NVIDIA AI Chip Production

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NVIDIA’s AI Chip Set for Mass Production at TSMC’s Arizona Facility

According to recent reports from Taiwanese media, NVIDIA’s advanced AI chips are on track to begin mass production by the end of this year at TSMC’s Arizona manufacturing site. This facility, which commenced chip production earlier this year, serves as a crucial component of TSMC’s strategy to strengthen its manufacturing capabilities within the United States. Analysts anticipate that as demand rises from significant technology players such as NVIDIA, Apple, Qualcomm, AMD, and Broadcom, the Arizona factory may soon reach full capacity.

Strong Demand and Capacity Constraints at TSMC’s Arizona Fab

Sources confirm that TSMC’s Arizona site is experiencing a wave of demand, with Apple being the top client expected to procure the first chips produced at this location. Currently, TSMC is manufacturing its N4 chips, which correspond to the 5-nanometer and 4-nanometer processes. Notably, NVIDIA’s AI chips are currently in the process verification stage at the Arizona plant, poised to enter production by year-end.

However, reports indicate that this surge in production could lead to price increases of up to 30% on certain chips. These hikes could primarily be attributed to rising U. S.manufacturing costs and high-capacity utilization rates at the facility. Nobunaga Chai from Cloud Express noted that the factory is currently producing approximately 15, 000 12-inch wafers monthly, with plans to ramp up to its peak capacity of 24, 000 wafers soon.

TSMC’s Progress on Advanced Manufacturing Processes

As TSMC fulfills orders at its Arizona location, the company is also making significant strides in its 2-nanometer chip manufacturing process. Recent reports indicate that TSMC has surpassed a 90% yield rate for this advanced technology, which is crucial in determining the efficiency and cost-effectiveness of chip production. The yield rate reflects the percentage of usable chips produced from a silicon wafer—higher yields translate into reduced production costs due to fewer defective products.

Notably, the increased yields pertain to memory products, with TSMC experiencing four times the tape-outs for its 2-nanometer technology compared to its 5-nanometer offerings. A tape-out marks the finalization of a chip design, indicating readiness for manufacturing. Analysts are monitoring revenue trends in wafer-cutting and polishing sectors as indicators of the demand for TSMC’s latest processes.

Market Trends and Tool Demand

Two firms, Kinik Company and Phoenix Silicon International Corporation, are observing a notable increase in demand for their diamond disc tools used in chip manufacturing. Market analyses reveal that Kinik holds a dominant 70% share of the market for TSMC’s 3-nanometer process technology. The company has boosted its monthly production capacity to 50, 000 diamond discs. As TSMC ramps up its 2-nanometer output, it is expected that revenue from diamond discs will also show consistent quarter-over-quarter growth.

Diamond discs are integral to the chip manufacturing process, specifically in Chemical Mechanical Planarization (CMP).These discs are essential for ensuring that wafer surfaces remain uncontaminated before manufacturing begins and for eliminating excess material after the intricate pattern of circuits has been printed onto the wafer.

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