Nvidia and several other chip manufacturers have secured production of 4nm chips at TSMC’s Arizona facility, aiming to sidestep potential tariffs. This strategic move comes in the wake of heightened U.S. export controls initiated in 2020, which severely restricted companies like Huawei from acquiring advanced chips. The sanctions isolated Huawei by blocking foundries that utilize American chip-making equipment from shipping sophisticated components, primarily those integral to 5G technology.
As a result, Huawei was compelled to make significant changes, including utilizing Snapdragon processors modified for 4G networks after the launch of their Mate 40 flagship. Eventually, Huawei partnered with SMIC, a leading Chinese foundry, to produce the 7nm Kirin 9000s chipset for its Mate 60 lineup, thereby reintroducing 5G capabilities without breaching the sanctions. However, this partnership left Huawei with a competitive disadvantage, as its most advanced chip technology now lags three generations behind global rivals operating on 5nm, 3nm, and emerging 2nm processes.
Further complicating the issue, the U.S. sanctions have resulted in SMIC’s inability to manufacture chips beyond the 7nm node due to restrictions on critical equipment like Extreme Ultraviolet (EUV) Lithography machines. This limitation highlights the ongoing impact of U.S. policies on China’s semiconductor industry. In recent developments, former President Trump hinted at the implementation of tariffs on imported semiconductors, which would further encourage domestic chip production.
According to DigiTimes, increased demand has already prompted many buyers to seek chips from TSMC’s Arizona facility, as they look to avoid tariff implications. With demand exceeding supply, TSMC is expected to increase its prices, particularly for 2nm wafers, which have surged significantly compared to previously launched nodes. As a consequence of these evolving market dynamics, higher prices for smartphones in the U.S. seem inevitable, impacting manufacturers such as Apple.
Initially anticipated to utilize the more advanced 2nm node for its A19 and A19 Pro chips, Apple has instead opted for TSMC’s 3nm process due to cost considerations related to the 2nm wafers.