TSMC's higher prices could make for even more expensive GPUs

TSMC is reported to be upping its chip production prices yet further for its upcoming 2nm node. New estimates for wafer prices claim TSMC will be charging $25,000 per wafer for 2nm chips.

TSMC's current 5nm wafers, as used by both AMD and Nvidia to produce graphics chips (Nvidia's "4nm" GPUs are built on 5nm class wafers), are said to cost around $13,000. According to The Information Network (via Tom's Hardware), TSMC's latest 3nm wafers went into production at the end of last year, and come in at $20,000 a pop.

Individual wafer prices are not the only determinant in the cost of a graphics card, of course. But they are very important. And the step up from today's $13,000 wafers to $25,000 wafers hardly bodes well for affordable graphics in the future.

TSMC is not the only chip producer in town, even if there isn't a terribly long list of alternatives for cutting-edge chip production. But these high prices, if accurate, could encourage AMD and Nvidia to go elsewhere.

It was only last generation with Ampere that Nvidia went to Samsung for production, only to switch back to its more usual production partnership with TSMC for Ada Lovelace, otherwise known as the RTX 40-series family.

Intel, meanwhile, is making a big push to get into the customer fab business and hopes to produce chips for all kinds of customers. Nvidia's CEO Jensen Huang recently commented that Intel's fabs are looking good and Nvidia is considering them for future GPU production.

AMD arguably has a more settled relationship with TSMC and it would be a bit more of a surprise to see it ditch TSMC for Samsung or Intel. But if Intel was offering competitive foundry services at a much lower cost, well, that would be hard to ignore.

Anyway, it will take some time for any of this to trickle down to graphics card prices. We're not now expecting Nvidia's next-gen GPUs until 2025 and 2nm graphics would be another two years after that. So, a lot could and will change in the meantime. But there's still no denying this hardly bodes well for the prospect of affordable graphics cards.

The context for all of this is the $40 billion that TSMC is investing in two production facilities in Arizona. The first is expected to come on line next year, with the second spinning up in 2026. 

TSMC is expecting to produce chips on its 4nm and 3nm nodes. That has lead to speculation that GPUs and CPUs from the likes of AMD and Nvidia could be made in the US. It's a very long time since high performance GPUs in particular were manufactured in the US.