TSMC (TSM) may be in discussions with Nvidia (NVDA) to manufacture its Blackwell artificial intelligence (AI) chips at TSMC’s upcoming Arizona facility, according to an exclusive Reuters report. Furthermore, the report stated that the chip major is already preparing to start manufacturing Nvidia’s Blackwell chips early next year.
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If these discussions materialize, such a move could mark a significant milestone for TSMC’s U.S. operations, as its Arizona plant is set to begin volume production next year.
Nvidia Could Be a Key Customer for TSMC at its Arizona Plant
Nvidia’s Blackwell chips, unveiled in March, have been in high demand from companies involved in generative AI and accelerated computing. If the agreement is finalized, it would make Nvidia a key customer for TSMC’s Arizona plant, which already counts Apple (AAPL) and AMD (AMD) among its customers, according to Reuters.
However, while TSMC’s Arizona plant will be able to handle the front-end manufacturing of Blackwell chips, the chips will still need to be shipped back to Taiwan for packaging. This is because the facility lacks Chip on Wafer on Substrate (CoWoS) capacity. CoWoS, crucial for Blackwell chips, is an advanced packaging technology that integrates chips onto a silicon interposer before mounting them on a substrate. This technology is currently only available at TSMC’s plant in Taiwan.
Is TSM a Buy, Hold, or Sell?
Analysts remain bullish about TSM stock, with a Strong Buy consensus rating based on unanimous five Buys. Over the past year, TSM has surged by more than 100%, and the average TSM price target of $232.50 implies an upside potential of 14.6% from current levels.
