(Sept 19): Taiwan Semiconductor Manufacturing Co (TSMC) and Arizona authorities are talking about adding advanced chip packaging capacity to the chipmaker’s plants in the state, governor Katie Hobbs said in Taipei on Tuesday.

Hobbs is part of a broader US delegation visiting the island, with discussions among officials and companies focused on Taiwan’s key role in the semiconductor supply chain. Undersecretary of Commerce Laurie E Locascio said the US is talking to TSMC about research and development for the first time, in an effort to bring more of the world’s biggest contract chipmaker’s technology onshore.

Packaging has become a bottleneck in the fabrication of the most in-demand silicon today, Nvidia Corp’s artificial intelligence accelerators, made by TSMC. The Hsinchu-based company has committed to expanding its packaging capacity in Taiwan, but expects supplies to be tight for another 18 months, chairman Mark Liu said at Semicon earlier this month. At the same event, Cadence Design Systems Inc chief executive officer Anirudh Devgan said packaging will be the key battleground for nations seeking to establish tech leadership.

TSMC’s commitment to Arizona now spans two fabs and US$40 billion (RM187.86 billion) in investment, and adding advanced packaging to that endeavour would again raise the ceiling on what’s possible to produce there. In December, TSMC said it would offer more advanced four-nanometer chips from its Arizona plant, at the request of Apple Inc, one of its biggest customers.

Arizona and TSMC are “working through some bugs”, Hobbs said, but she is “very impressed by the speed with which it has been built”, and the project continues on schedule. TSMC executives said at its last earnings call that operations of the first Arizona plant will be delayed to 2025 due to a lack of skilled labour.