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TSMC plans to open chip packaging plant in Arizona by 2029

MacDailyNews

Apr 22

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Taiwan Semiconductor Manufacturing Co. (TSMC) plans to open a chip packaging plant in Arizona by 2029, an executive told Reuters.

Modern artificial intelligence chips, such as those made by Apple and Nvidia, are not single chips but several chips glued together using advanced packaging technologies. This step has become a major supply bottleneck for Nvidia and other companies. In a January earnings call, TSMC said it was applying for permits to begin construction of its first advanced packaging plant in an existing Arizona facility, but did not provide a timeline for when it would come online.

Stephen Nellis and Max Cherney for Reuters:
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At a conference in Santa Clara, California, on Wednesday, TSMC executives said construction has begun.

“We are aggressively expanding our own capability within the Arizona facility,” Kevin Zhang, deputy co-chief operations officer and senior vice president, said on Tuesday ahead of the conference. “We are going to build a CoWoS capability and 3D-IC capability there before 2029, so that’s still our goal,” Zhang said, referring to two of TSMC’s packaging technologies that are in high demand.

Companies such as Apple and Nvidia already source chips from ‌TSMC’s Arizona ⁠factory, but many of those chips must go back to Taiwan for packaging.

Amkor Technology last year said it was working with Apple and Nvidia to build a packaging factory in Arizona by mid-2027 and start production by early 2028, earlier than TSMC’s timeline. Amkor and TSMC in 2024 said ⁠they would work together to bring several of TSMC’s advanced packaging technologies to Arizona, but the two companies have not disclosed details.

Zhang said Amkor and TSMC’s technology discussions remain ongoing.

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MacDailyNews Take: This is a step in the right direction for supply chain diversification, especially welcome amid ongoing geopolitical tensions around Taiwan. Apple and Nvidia already source some leading-edge chips from TSMC’s Arizona fabs; bringing advanced packaging locally would create a more complete U.S. footprint and reduce unnecessary trans-Pacific shipping.

That said, 2029 remains a long way off. Amkor aims to start its own Arizona packaging production earlier (targeting early 2028), and broader rumors suggest TSMC could eventually scale to multiple packaging facilities as part of a massive Arizona “gigafab” cluster. Taiwan will continue to dominate CoWoS (Chip-on-Wafer-on-Substrate) packaging capacity in the near term, with aggressive expansions already ramping there.

TSMC is responding to customer demands (and likely U.S. incentives/political pressure) by slowly localizing more of the supply chain. It’s smart risk management and good news for American tech sovereignty in the long run — but the timeline highlights how difficult it is to replicate Taiwan’s ecosystem quickly. For AI leaders hungry for more capacity now, the packaging crunch isn’t going away anytime soon. Patience (and continued heavy investment) will be required.

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