NVIDIA's Blackwell Chips Manufacturing Moves to Arizona with TSMC

NVIDIA is making strides towards bringing the production of its Blackwell chips to the United States. This initiative aims to reduce geographic risks and increase output for this highly sought-after chipset. However, there are still barriers that need addressing.

The possibility of NVIDIA moving Blackwell production to TSMC’s newly built facility in Arizona has sparked excitement within the semiconductor industry. Onshoring this production aligns with national interests and decreases dependence on international supply chains, particularly concerning China.

Challenges with Production and Packaging

While the Arizona plant is advanced, it currently lacks the capability to perform CoWoS (Chip-on-Wafer-on-Substrate) packaging, a specialized method vital for high-performance computing and AI applications. Consequently, Blackwell chips may still need to be sent to Taiwan for final processing, reintroducing some risks associated with international logistics.

Recently, TSMC received $6.6 billion from the US government’s CHIPS Act, part of a broader $65 billion investment plan aimed at ramping up semiconductor manufacturing. These funds could help TSMC establish additional facilities in the future, potentially including the necessary infrastructure for CoWoS packaging, thereby supporting the fully onshored production of Blackwell chips.

There is also a glimmer of hope through a partnership with Amkor, which specializes in microchip packaging services and is set to offer CoWoS services at its Arizona facilities. With TSMC and Amkor working together, there are plans in motion that promise efficiency improvements.

Future Developments in AI Technology

Amid these developments, speculation is swirling around NVIDIA's upcoming AI innovations, with expectations of an earlier-than-anticipated launch of their next generation AI systems, termed Rubin. Analysts anticipate that these new chips will outperform existing models by utilizing a state-of-the-art 3nm manufacturing process and next-generation HBM4 memory.

NVIDIA is also collaborating with Schneider Electric to create innovative cooling solutions that will improve the performance and efficiency of its GPUs and CPUs.

Market analysts are watching these developments closely, as there is a positive sentiment around NVIDIA stock moving into 2024. The consensus among analysts shows an increasing price target, suggesting around 15% potential upside based on growing demand for advanced semiconductors.

Late 2024 indicators show a bullish trend for NVIDIA's stock price, with a critical resistance target approaching $150. A breakthrough beyond this level could lead to significant upward momentum, potentially reaching between $190 and $200.

Investment Considerations

Investors interested in NVIDIA should weigh these market dynamics. Currently rated a "Moderate Buy," NVIDIA is witnessing a lot of analyst activity, but top-rated analysts have identified several other stocks they believe may provide better returns at this time.

Overall, despite challenges, NVIDIA's move towards onshoring its Blackwell chip production indicates a strong commitment to innovation and adaptation in the evolving tech landscape.

NVIDIA, Blackwell, TSMC