Apple Doubles Down with Second Chip at TSMC Arizona

[Exclusive] Apple Watch SiP chip joins A16 processor. AMD's Ryzen 9000 also in production. Plus capacity updates. [Correction]

Jan 08, 2025

This post was corrected. The codename for the Ryzen is Eldora, not Grand Rapids.

Good Morning from Taipei,

I’ve finally landed on a name for this publication: Culpium. Further publishing announcements at the end.

My last post was about TSMC, and my next post will also be about TSMC after earnings on Thursday January 16, but there’s some updates I decided couldn’t wait.

TSMC Arizona has picked up a second Apple product. In addition to the A16 processor for iPhones, which I shared with you in September, the fab is now producing SiPs (Systems-in-Package) for the Apple Watch, according to my sources. This product is believed to be the S9 SiP (I’ll be honest, I am a little unclear on this, but I’m 99% sure it’s the S9). Recall that TSMC Arizona is manufacturing at N4 (part of the N5-family of process nodes) while the S9 is made in Taiwan at N4 and is a derivation of the A16, so this would make sense.

I also have further information on the AMD product, which I previously reported in October. It’s the Ryzen 9000, codenamed Eldora (there’s more than one chip in this series, I know). What’s more, it is now in production. That means, TSMC currently has three processors in the oven at Arizona. Ryzen 9000 was only released last year, so the delay from first release to Arizona production is rather brief.

Graphic: Tim Culpan/Culpium, Adobe Stock

There’s also an update on capacity. Right now, Phase 1A (aka P1A) is up and running at around 10k wafers per month — shared among those three products (Nvidia is in the queue, so to speak). P1B is still being completed, and when it is finished the total capacity at Arizona Phase 1 will rise to 24k/month. The information I am receiving suggests tooling delays may be a bottleneck. Be careful how you read this, though, that does not mean P1B is “delayed.” The revised guidance — after the infamous “worker shortage” comments — was 1Q 2025. So TSMC has until March 31 before it can be accused of missing that target.

Management is highly incentivized to not miss: TSMC’s board will meet in Arizona in February. I cannot recall the last time the board met overseas, though I don’t feel confident enough to say this is the first time. The move is significant and no doubt the board will get a fab tour — dressed in bunny suits, to be sure.

A TSMC spokesperson declined to comment on clients, production, or its board schedule.

TSMC cancelled its December Arizona celebration featuring President Biden after Biden lost the election. It would be incorrect to say the US board meeting was scheduled because of the election result to curry favor with President Trump because it was actually planned as early as the first week of November. The move to hold a TSMC board meeting in the US could be seen as a nod to the fact that half its directors are American, but the symbolism is undeniable.

Still, I expect the Trump Administration will claim credit and TSMC wouldn’t be stupid enough to correct the record. In fact, management may well lean into such a news story. Board meetings are closed door, which means you can file them under “Nothing to See Here.” As yet I’ve heard no information to suggest that there’ll be any event featuring President Trump, but I wouldn’t be surprised. If you’re a member of President Trump’s Secret Service detail and want to give me a heads up, I’ll be thankful.

Let’s recap the new items I’m sharing with you today:

Apple Watch SoCs join A16 iPhone processors in Arizona, both now in production
AMD’s Ryzen 9000 confirmed as in production at TSMC Arizona
Phase 1A in operation at 10k/month
Phase 1B facing tooling bottlenecks, total P1 capacity to hit 24k once P1B is running. This does NOT mean a “delay.”
TSMC Board to meet in Arizona in February (this was previously reported).

The Year(s) Ahead

There’s a lot of drama heading TSMC’s way this year, in addition to heaps more AI opportunity.

That racial discrimination lawsuit is in the works, while staff turnover and retention are ongoing challenges. Just this week, TSMC made an internal announcement inviting Taiwan staff to apply for roles at Arizona, sources tell me. There’s a couple of hundred positions available in areas including fab operations and equipment installation. This runs counter to TSMC’s aim to hire more locally and likely isn’t done willingly. Local headcount now surpasses foreign (Taiwan) at Arizona, I am told, but the need to pull hundreds of people from HQ shows how difficult it is to staff up the new facility.

Separately, the company will need to face the music over letting Huawei products slip into its fabs. I expect a fine, at the least, but the Trump Administration may well leverage that blunder to get for more out of TSMC. I will be severely disappointed if analysts don’t raise this issue with management at next week’s IR meeting.

Long term, I think it’s highly probable that TSMC Arizona will be spun off due to US government pressure. It would initially be 100% controlled by TSMC, but eventually could get listed on the NYSE or NASDAQ with TSMC HQ’s stake slowly declining. The business model would probably be some kind of technology and management licensing deal because I see no hope for TSMC Arizona doing leading-edge process R&D on its own. But this is way into the future and there’s more pressing issues for TSMC, its clients, and the US government to deal with.

Thanks for reading.

Now for some publishing updates:

Culpium is the new name. Tim Culpan’s Position seemed well … you know.
I’m staying free for now, though I greatly appreciate the many, many pledges. I’ll try to find a way to reward those who did pledge early, pre-monetization.
My cadence will be reduced. I apologize for this, but it can’t be helped.
I am likely to drop the Friday chart and may not always be able to meet my self-imposed regular Wednesday schedule as I get busy on other stuff.
If I get a scoop, I’ll bring it to you ASAP.