New chip-packaging facility could save TSMC’s Arizona fab from “paperweight” status

Enlarge / Apple wants to build more of its A- and M-series chips in the United States.


Late last year, Apple CEO Tim Cook announced that the company would definitely be buying chips made at Taiwan Semiconductor’s new Arizona-based fab once it had opened. Apple working with TSMC isn’t new; most, if not all, of the processors currently sold in Apple’s products are made on one of TSMC’s many manufacturing nodes. But being able to buy them from a US-based facility would be a first.

The issue, as outlined by some TSMC employees speaking to The Information in September, is that the Arizona facility would manufacture chips, but it wouldn’t be building a facility to handle packaging. And without packaging, the Arizona factory would essentially be a “paperweight,” requiring any chips made there to be shipped to Taiwan for assembly before they could be put in any products.

Today Apple announced that it had solved that particular problem, partnering with a company called Amkor to handle chip packaging in Arizona. Amkor says that it will invest $2 billion to build the facility, which will “employ approximately 2,000 people” and “is targeted to be ready for production within the next two to three years.” Apple says that it has already worked with Amkor on chip packaging for “more than a decade.”

“Amkor worked closely with Apple on the strategic vision and initial manufacturing capability of the Peoria facility, which will package and test chips produced for Apple at the nearby TSMC fab,” the company said in a statement. “When the new facility opens, Apple will be its first and largest customer.”

Both TSMC and Amkor will likely benefit from billions in government subsidies provided by the CHIPS Act, which authorized up to $200 billion in subsidies to chipmaking companies that want to build US facilities. Little of the money has actually been distributed as of this writing, but TSMC, Intel, and many other smaller companies have applied for funding, and Amkor says that it has as well.

As smaller, more-efficient manufacturing processes become more difficult and expensive to spin up, chip designers are relying on advanced packaging technologies to advance their chips. Some of AMD’s Ryzen processors improve performance by stacking extra cache on top of the CPU die, and Intel’s next-generation Meteor Lake processors are actually several different chips welded together during the packaging stage with a high-performance interconnect. Apple’s top-end M1 Ultra and M2 Ultra chips are essentially two M1/M2 Max chips stuck together.

It will still be several years before we see any Apple products with US-made chips in them. TSMC’s Arizona facility isn’t scheduled to open until 2025, and Amkor’s packaging facility could take a bit longer than that. TSMC had previously planned to have the factory running by the end of 2024, but the company announced a delay because of an alleged lack of technical workers with relevant expertise. US-based tech companies and the US government all want to reduce their reliance on chips made in Taiwan, based on fears that the country could be invaded by China.

But if the US does achieve that goal, it’s not going to happen any time soon. Nvidia CEO Jensen Huang guessed earlier this week that it could be “between a decade and two decades” before the US’s chipmaking supply chain is fully independent from other countries, due partly to lagging investments in science education and R&D.

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