NVIDIA’s First Arizona-Made Blackwell Wafer Exposes a Hidden Weakness

A few days ago, NVIDIA CEO Jensen Huang proudly unveiled the first Blackwell AI chip wafer produced in the United States at TSMC’s Arizona facility, marking a historic milestone for domestic semiconductor manufacturing. The event symbolized America’s progress toward reindustrialization and technological independence under the “Made in USA” initiative. However, as groundbreaking as this achievement is, it also revealed a critical gap in the country’s semiconductor supply chain, the absence of advanced packaging capabilities needed to complete the AI chip manufacturing process.

As noted by industry analyst @mingchikuo on X, the Blackwell wafer showcased in Arizona will still need to be shipped back to Taiwan for the final and most complex stage of production: advanced packaging. This process, which includes cutting, interconnecting, and stacking multiple dies to maximize performance, remains heavily concentrated in Asia, particularly at TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) facilities.

The press release didn’t make it clear that after the first Nvidia Blackwell wafer was produced in the U.S., it would still need to be shipped to Taiwan for CoWoS advanced packaging — only then would the production of the Blackwell chip be considered complete. Two years from now,… pic.twitter.com/15O2ZTvhbu

— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) October 19, 2025

While wafer fabrication represents the front-end of chip production, the back-end packaging process is what transforms bare silicon into fully functional AI processors. In this stage, wafers are sliced into dies, mounted onto substrates, and interconnected through technologies like TSMC’s CoWoS or Intel’s EMIB. These packaging solutions are vital for scaling AI chips, as they enable high-bandwidth, low-latency interconnects between dies, allowing chips like Blackwell to achieve their record-breaking computational performance.

At present, the United States still lacks domestic advanced packaging infrastructure, forcing companies such as NVIDIA and TSMC to rely on overseas facilities for critical steps of the manufacturing process. This reliance adds significant logistical and cost burdens, as wafers fabricated in Arizona must be flown to Taiwan for packaging and assembly before returning as finished AI accelerators. It also highlights a strategic vulnerability, as the country’s capacity to produce cutting-edge AI hardware remains partially dependent on foreign partners.

Recognizing this weakness, both TSMC and U.S. policymakers have taken steps to address it. As part of its multi-billion-dollar U.S. investment strategy, TSMC plans to establish advanced packaging operations in America, aiming to localize not only wafer production but also back-end processes. However, constructing such highly specialized facilities will take years, as the U.S. must develop both the technical ecosystem and skilled workforce from the ground up.

To accelerate progress, TSMC has entered into collaboration with Amkor Technology, a leading U.S.-based semiconductor packaging and test services company. Amkor recently broke ground on a new $7 billion advanced packaging and testing campus in Peoria, Arizona. Through this partnership, Amkor aims to introduce CoWoS and related packaging technologies domestically, providing turnkey solutions for chipmakers and enabling a faster time-to-market for AI processors like Blackwell.

This collaboration marks a crucial step toward creating a complete semiconductor ecosystem in the United States — encompassing both front-end fabrication and back-end assembly, packaging, and testing. The development of these capabilities will not only reduce dependency on Asia but also enhance supply chain security, which has become a strategic priority in the era of global chip competition.

For NVIDIA, the successful production of the first Arizona-made Blackwell wafer remains a landmark achievement. Yet, it also highlights how far the U.S. semiconductor industry still has to go to achieve true self-sufficiency. Until domestic packaging and testing capacity are fully operational, even America’s most advanced AI chips will continue to rely on international collaboration to reach completion.

The unveiling of the Blackwell wafer is both a symbol of progress and a reminder of the challenges ahead. As TSMC, Amkor, and U.S. policymakers push to close this gap, the coming years will determine whether the United States can transform its early successes into a fully integrated, end-to-end semiconductor manufacturing powerhouse.

What do you think about the U.S. still depending on Taiwan for advanced packaging? Is it a temporary necessity or a long-term strategic concern? Share your insights below.