TSMC's US-made chips will have a price hike, as per AMD's CEO Su.
In a significant move, Advanced Micro Devices (AMD) and other US firms are diversifying their chip manufacturing sources, with a focus on expanding product sourcing from Taiwan Semiconductor Manufacturing Company's (TSMC) facilities in Arizona. This strategic shift aims to build a more resilient semiconductor supply chain amid ongoing geopolitical tensions and the lessons learned from pandemic-era disruptions.
AMD's Diversification Efforts
AMD’s CEO, Lisa Su, has publicly emphasised the importance of supply chain resilience. She announced that the company will begin receiving chips from TSMC’s Arizona plant by the end of 2025. AMD has already validated its Turin 5th-generation Epyc CPUs at this facility and has announced that its next-generation Venice CPU will be manufactured on TSMC’s 2nm process in the US.
The Cost Premium of US-Based Manufacturing
Chips produced at TSMC’s Arizona plant will cost between 5% and 20% more than those made in Taiwan, according to Lisa Su. This premium arises from higher operational and labor costs in the US, as well as the need to build new infrastructure and talent pipelines. Despite the increased cost, AMD and other industry leaders view this as a necessary investment to ensure supply chain stability and reduce vulnerability to future disruptions.
Lisa Su has framed the premium as a “very good investment,” arguing that the broader benefits of supply chain resilience—including reduced risk of interruption and closer proximity to key US markets—outweigh the incremental cost when amortized across the total computing infrastructure AMD delivers. She noted that the Arizona facility already matches TSMC’s yield and quality standards.
The Future of the Semiconductor Industry
The move towards US-based chip production is further encouraged by US government initiatives and the broader push for national semiconductor independence. However, the higher costs raise questions about the competitiveness of US-based semiconductor manufacturing over time, and companies will need to balance cost optimization with supply security.
US Secretary of Commerce, Howard Lutnick, stated that the administration is comfortable with allies buying a significant number of chips and having a large cluster. The industry will continue to monitor how these higher costs impact competitiveness and whether further government support or technological innovation can mitigate the premium over time.
Key Points
- Diversification Focus: AMD is diversifying by sourcing from TSMC’s Arizona plant; first chips expected late 2025
- Cost Premium: 5–20% higher for US-made chips
- Driver: Supply chain resilience, reduced geopolitical and pandemic risk
- Leadership Stance: AMD CEO sees premium as justified for security, quality, and proximity
- Future Outlook: Ongoing need to balance cost, quality, and supply chain stability across the industry
This strategic pivot by AMD marks a significant step towards creating a more resilient semiconductor supply chain in the US. The industry will closely watch how this approach affects costs and competitiveness in the long run.
The diversification efforts by AMD regarding chip manufacturing sources include a focus on receiving chips from Taiwan Semiconductor Manufacturing Company's (TSMC) facilities in Arizona, and this shift is driven by the need for supply chain resilience, mainly due to geopolitical tensions and the lessons learned from pandemic-era disruptions. Interestingly, the chips produced at TSMC's Arizona plant will incur a cost premium of 5% to 20% due to higher operational and labor costs in the US, as well as the need for new infrastructure and talent pipelines. Despite this premium, AMD, along with other industry leaders, views this as a necessary investment to ensure supply chain stability and reduce vulnerability to future disruptions.
