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Why US startups are turning to local fabs for AI chip production

Jan 08, 2025 - businessinsider.com
Most AI chips are produced by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan, with Nvidia and its competitors relying on TSMC for manufacturing. However, some startups are exploring US-based manufacturing to reduce costs and gain a competitive edge. Positron AI, founded by Thomas Sohmers, is one such startup, designing chips optimized for transformer models. Positron's chips are manufactured by Intel-owned Altera in Arizona, offering a cost-effective and flexible alternative to TSMC. Sohmers emphasizes the importance of performance per dollar and watt, noting that US production can be cheaper for semiconductors.

Despite the advantages, there are challenges, including skepticism from investors and concerns about the reliability of non-TSMC fabs. However, the geopolitical tensions involving Taiwan, China, and the US make sourcing components outside of these regions appealing. Positron is also looking to source more materials from North America to mitigate risks and speed up prototyping. The industry is gradually recognizing the need for more competition in the AI chip market, as Nvidia's dominance raises concerns.

Key takeaways:

  • Most AI chips are manufactured by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan, but some startups are working with US manufacturers to lower costs.
  • Positron AI, founded by Thomas Sohmers, is developing a chip architecture optimized for transformer models, aiming to compete on performance and price for AI inference.
  • Positron's chips are manufactured by Intel-owned Altera in Chandler, Arizona, offering a cheaper and more flexible manufacturing partnership compared to TSMC.
  • While US fabs may lack the technical prowess of TSMC, they offer favorable terms for startups, providing leverage and reducing funding needs amid geopolitical tensions.
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