At an AI-focused event in Washington, D.C., AMD Chief Executive Lisa Su announced that chips sourced from TSMC’s Arizona facility are estimated to cost “more than 5 percent but less than 20 percent” more than equivalent chips manufactured in Taiwan. AMD anticipates receiving its first U.S.-made chip shipments by year-end 2025
Elevated Costs Reflect Strategic Trade-Offs
- The additional expense stems from higher U.S. construction costs, supply chain complexities, and labor premiums. However, AMD views these costs as necessary for supply chain diversification and long-term resilience
- Despite the premium, Lisa Su emphasized the U.S. facility’s yield performance matches Taiwan fabs, ensuring comparable quality in production
Contrasting Perspectives on U.S. Fab Cost Premium
Industry Reports Suggest Higher Margins
Reports from publications like TrendForce and TechPowerUp suggest TSMC’s U.S. operations might impose a 30% cost premium per wafer compared to Taiwan, due to elevated depreciation, tariffs, and logistics
Analysis Points to Smaller Differences
Conversely, TechInsights analysis—cited by multiple outlets—argues the premium shrinks significantly once fab automation scales up: the additional cost could be around 10% per wafer, largely due to equipment expense and minimal labor impact (<2%). This challenges earlier assumptions of much higher cost differentials.
Strategic Context: TSMC’s U.S. Expansion and Policy Support
- TSMC’s Fab 21 in Phoenix is part of a multi-phase plan that started production at the 4nm node in early 2025, aiming to scale to 30,000 wafers per month—with later phases targeting nodes as advanced as 2nm by the late 2020s
- The U.S. government’s CHIPS and Science Act backs this effort with subsidies including a $6.6B grant and $5B in loan guarantees, making the total investment exceed $65B—potentially up to $165B as TSMC expands to six additional fabs, packaging lines, and research facilities
- Despite operational delays—including regulatory permitting, skilled labor shortages, and reliance on imported chemicals—TSMC’s U.S. plant is expected to produce chips with performance levels on par with Taiwan fabs
Implications for AMD and the Broader Industry
- AMD, a lead customer at the Arizona fab, is absorbing higher costs to enhance supply chain resilience and manage geopolitical uncertainty.
- Customers like AMD and NVIDIA expect to share higher manufacturing costs, while maintaining product reliability and access to advanced nodes Reuters
- While some firms expected larger markups (up to 30%), AMD’s official view of 5–20% reflects a moderated, strategic approach based on evolving data and reliability considerations.
Summary
TSMC’s U.S. production, particularly from its Arizona facility, comes at a 5–20% higher cost per chip—according to AMD CEO Lisa Su. Though some estimates point to even larger cost differentials, analyses suggest costs may stabilize near 10% when scaled and automated. Supported by significant U.S. government subsidies, TSMC’s expansion underscores a shift toward domestic chip manufacturing—balancing increased expense with strategic resilience in the global semiconductor ecosystem.
