TSMC’s Arizona plant is expected to begin mass production in 2024. Credit: Ralf Liebhold/Shutterstock.

Taiwan Semiconductor Manufacturing (TSMC) is reportedly in negotiations with NVIDIA to manufacture its Blackwell artificial intelligence chips at TSMC’s upcoming facility in Arizona.

This development, as cited by Reuters from three sources familiar with the matter, could mark a significant shift for Nvidia’s production strategy, as the Blackwell chips have thus far been produced exclusively in Taiwan.

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TSMC is poised to commence production at the Arizona site as early as 2025, according to the sources.

Nvidia’s Blackwell chips, which were introduced in March 2024, have witnessed substantial demand, particularly from sectors focused on generative AI and accelerated computing. These chips are touted to be 30 times faster at executing tasks such as powering chatbot responses.

Should the discussions lead to a final agreement, Nvidia would join the ranks of other high-profile customers at TSMC’s Arizona plant, which is slated to begin mass production in 2024.

While TSMC and Nvidia have refrained from commenting on the confidential talks, the sources have revealed that Apple and Advanced Micro Devices are already clients at the Arizona facility.

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Despite the potential for front-end processing in Arizona, the Blackwell chips will still require shipment back to Taiwan for packaging, as the Arizona plant lacks the necessary chip on wafer on substrate (CoWoS) capacity.

Currently, all CoWoS capabilities are based in Taiwan.

TSMC, the world’s preeminent contract chipmaker, is investing billions in constructing three facilities in Phoenix, with the US government providing significant subsidies.

This investment aligns with the US’s strategic goal to reinvigorate domestic semiconductor manufacturing.

In a separate move, Nvidia has announced the inauguration of its first research and development centre in Vietnam. This R&D hub will concentrate on software development and AI, leveraging Vietnam’s pool of STEM talent.

Nvidia’s collaboration with the Vietnamese government aims to foster AI adoption by connecting with industry leaders, startups, governmental bodies, academia, and students.