TSMC 2nm Hits 90%, NVIDIA AI Chips Coming

According to reports, NVIDIA's next-generation artificial intelligence (AI) chips are set to enter mass production by the end of 2025 at TSMC's advanced fabrication plant in Arizona, according to recent reports.

The Arizona facility, which began chip production earlier this year, is a cornerstone of TSMC's U.S. manufacturing strategy. Analysts predict the plant will soon reach full production capacity as it becomes a critical site for fulfilling high-volume chip demand from major American technology companies such as NVIDIA, Apple, Qualcomm, AMD, and Broadcom.

TSMC is currently manufacturing N4 process chips (5nm and 4nm nodes) at this site, with Apple expected to be the largest client. The tech giant is anticipated to be the first to receive chips from this U.S. plant. Meanwhile, NVIDIA's AI chips are undergoing process validation at the facility and are scheduled to begin production by the end of this year.

In addition to the strong demand from the Arizona site, sources also report that TSMC has made notable progress in its 2nm process technology. The yield rate for its 2nm memory-related products has already exceeded 90%, signaling a significant milestone in advanced semiconductor manufacturing.

However, the rising demand may also come with increased production costs. Industry insiders reveal that chip pricing from the Arizona facility could climb by as much as 30%, primarily due to higher operational costs in the United States. The anticipated rise in pricing is also attributed to the factory's growing capacity utilization.

According to Nobunaga Chai from Cloud Express, the Arizona plant currently produces approximately 15,000 12-inch wafers per month. Plans are underway to increase monthly output to 24,000 wafers, reaching its designed peak capacity.

Meanwhile, strong progress in TSMC's 2nm technology is driving demand for semiconductor manufacturing tools. Reports indicate that 2nm trial production volumes are already four times higher than those of the 5nm node. Analysts are closely monitoring trends in wafer slicing and polishing to assess the broader demand for 2nm and 3nm nodes.

Tool manufacturers such as Kinik and Phoenix Silicon International Corporation are seeing increased demand for their diamond grinding pads—key components used in chemical mechanical polishing (CMP), a crucial step in the chip fabrication process. These tools are essential for removing impurities from the wafer surface and enabling precise microcircuit patterning.

Kinik, which currently holds a 70% market share for polishing tools in TSMC's 3nm production, has expanded its monthly capacity to 50,000 diamond pads. With TSMC ramping up its 2nm production, corresponding revenues from CMP tools are expected to see quarter-over-quarter growth.