Rarely a week goes by without Jensen Huang, the CEO of Nvidia, being in the news. In late March, during Nvidia’s GTC developers conference, Huang was in the news daily as he updated the world on how Nvidia was addressing hardware and software needs for AI, as well as starting to look at efforts in quantum computing, which seems to be the next big thing after AI.
During GTC week, Huang stated that Nvidia ultimately plans to shift manufacturing onshore, and according to Nvidia’s annual report, they have $20 billion in purchase commitments as of January 28 last year. One would assume that the majority of purchase commitments are with TSMC, which, with Nvidia’s $130 billion in revenues for the 2024 calendar year, is close to a year’s supply of chips. Nvidia is reportedly already manufacturing chips at TSMC’s Arizona site; however, these chips are then shipped to Taiwan to get packaged.
Therein lies one of the biggest challenges to the true onshoring of semiconductors: how to get your high-performance chips packaged in the USA. When the original CHIPS Act was being created only 3% of packaging took place in the United States. Intel has some advanced packaging capability, but a considerable amount of Intel’s advanced packaging takes place overseas, as does Nvidia’s and AMD’s. While the CHIPS ACT simulated significant activity in the packaging space, it remains to be seen what will actually take place. Over the past 3 years, there has been a significant increase in the level of activity for onshoring advanced packaging in the United States, let’s look at a few if the major activities.
TSMC and Amkor have a JV moving forward in Peoria, Arizona, for advanced packaging. The facility is expected to open in 2026 or 2027. The facility is projected to provide packaging for Apple and Nvidia using fan-out wafer-level packaging (FOWLP) and chip on wafer on substrate (CoWoS). CHIPS Act funding was part of this investment.
While that funding is now uncertain, with TSMC, Apple, and Nvidia investment announcements for more US manufacturing, there is a high probability this facility will continue forward. More recently, TSMC announced its $100 billion investment, which includes new semiconductor fabs, as well as two packaging facilities. Since the announcement didn’t have details, it is possible that one of those two facilities could be the JV with Amkor.
SK hynix has committed to a high-bandwidth (HBM) memory packaging facility in Indiana scheduled to open in 2028. Currently, there is some CHIPS Act money behind this facility. This facility will bring 3D memory packaging to the United States. This will supply the Amkor advanced packaging facility with HBM for AI, and other high-performance compute applications being packaged in the United States.
Intel is also onshoring advanced packaging capabilities in the United States, with part of their CHIPS Act monies setting up their New Mexico packaging facility for 3D packaging. The New Mexico facility was set up as a packaging foundry and is potentially packaging systems for customers outside of Intel. This might give them a leg up over TSMC in the long run, as TSMC currently performs 3D packaging for customers who manufacture chips inside TSMC. The one exception is that TSMC will purchase HBM from the major memory manufacturers and package it with their clients’ high-performance computing chips.
Illinois-based NHanced Semiconductors has recently opened an advanced packaging foundry in Indiana for 2.5 and 3D packaging. Nhanced Semiconductor is promoting the Foundry 2.0 model where the best-of-class chips and components from traditional foundries can be packaged together using 2.5D and 3D packaging technology. This opens the door for companies that might not have the wherewithal to work with TSMC or Intel on packaging projects, a place to create next generation compute platforms.
Supporting the manufacturing rollout of advanced packaging in the United States is a renewed focus on packaging research. Industry-academic programs such as the ASU advanced packaging program, supported by DARPA, are developing advanced fan-out wafer-level packaging (FOWLP) techniques with a team of partners, which include Deca and Applied Materials. This will help to create an equipment, and possibly a materials supply chain which is a critical part of the packaging ecosystem.
The level of activity on advanced packaging is a good start, and with the possibility of three advanced packaging facilities being located and succeeding in the United States, the potential for an improved advanced systems supply chain is closer to reality.
