Production of 3NM Chip in US to disrupt the Globe

There was chip shortage on American families when car prices drove a third of inflation because of lack of chips, factory workers were furloughed, household appliances were often unavailable, all because of a lack of semiconductors

US is geared up for the production of semiconductor. President Joe Biden’s signed for USD 280 billion bipartisan bill to boost domestic high-tech manufacturing, part of his administration's push to boost US competitiveness over China.

Taiwan Semiconductor Manufacturing Company Limited or TSMC has already announced its plans to set up a single factory in Arizona to open in 2024. Now as reported Apple and TSMC are in talks to bring 3nm chip production to the US. As in known lower process nodes drive more transistors on the SoC, more power and more operations are the end result. As reported by TSMC that, it is planning to set up a second chip factory in Arizona because of “strong customer demand”.

As Samsung’s 4 nm process node causes chip to heat and company decided to it a go by and the demand shifted to TSMC. Next year, TSMC will start production of 3nm A 17 Bionic for the 15 Pro and iPhone 15 nmUltra. Apple and TSMC has been working together for a long time and 25% of TSMC’s revenue comes from Apple.

Though Apple wants to shift its chip production from China. Given the nature of the project it is not going to happen in a jiffy. Some analysts are of the opinion that it *would take at least 8 years to transfer iPhone production from China to India.

The US restrictions have forced China to move in the self-reliant mode. On the other side of the semiconductor geo-strategic story, the Phoenix plant is waiting for the 5nm chips to be withdrawn from the market. This would be the right to time to move 3nm production to the US.

Apple is planning to buy chips made in US and Europe by 2024 in a bid to reduce dependency on Asia, Bloomberg reported citing CEO Tim Cook's comments. Apple has "already made a decision to be buying out of a plant in Arizona", Cook reportedly said. He added that Apple could expand its supply of chips from plants in Europe.

The famed journey of the chip to the US will not be fairly tale story as it is made out to be. The China ecosystem and supply chain, where logistics work seamlessly, would be difficult to replicate. The challenge is very simple if TSMC decides to start making chips in the US,* they would be cut from the supply chain. As being talked about the Arizona factory could open for business in 2025. Apple and other companies will have to move onto to 2nm chips by that time. As per the current calculations iPhone 17 will use this process node. If Apple will still differentiate the chips used in non-Pro and Pro models, *then by 2025, the iPhone 17 models might use chips made in the US.*

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA