SoftBank's Project Crystal Seeks TSMC Partnership Amid AI Manufacturing Ambitions

As of last week, Taiwan Semiconductor Manufacturing Company (TSMC) experienced a decline of 1.87% over three consecutive days, accounting for a total decrease of 2.86%. This downturn follows a weekly drop of 0.75%, although since the start of the year, the company has seen a growth of 6.86%. TSMC's current market capitalization stands at 1,086.628 billion USD.

SoftBank founder Masayoshi Son is planning a colossal industrial park in Arizona aimed at revolutionizing artificial intelligence and robotics manufacturing in the U.S. This ambitious project has been dubbed "Project Crystal" and is inspired by the manufacturing accomplishments of Shenzhen. SoftBank has invited TSMC, a leader in semiconductor production, to be deeply involved, although participants of TSMC have clarified that the project doesn’t align directly with their current expansion in the region.

While the completion of TSMC’s first plant in Phoenix begins production, SoftBank faces uncertainty with its invitation to TSMC for further collaboration. Efforts include lobbying federal and state governments for tax incentives for participating companies. This move complements SoftBank's larger strategy, as they reach out not only to TSMC but to other tech giants like Samsung, aligning investments from SoftBank Vision Fund such as Agile Robots SE into the park for creating an integrated AI ecosystem.

Despite the magnitude of potential investments, projected to reach a trillion dollars, SoftBank is exploring a financing method typical in infrastructure projects, allowing incremental funding to ease initial monetary demands. SoftBank’s financial footing, supported by cash reserves and assets like Arm Holdings, presents a formidable position to undertake this massive venture.

Market reactions have been favorable, with SoftBank’s stock in Tokyo climbing by 2.3%, mirrored by a 1.9% gain for TSMC stock in Taipei. Analysts like Melissa Otto emphasize the potential in combining semiconductor expertise with AI engineering across diversified verticals for creating greater value beyond simply acquiring heavy assets.

The future of this undertaking may hinge on political sentiments, particularly from the Trump administration. The proposal remains in its conceptual phase, awaiting further engagement from major tech players to determine its ultimate scale. Should it come to fruition, Son's plan to replicate "Project Crystal" across the U.S. could mark a historic stride in AI-driven manufacturing, potentially cementing SoftBank’s legacy.

In terms of semiconductor innovation, TSMC is gearing up to introduce its 2nm technology with prospects of Apple utilizing it for the iPhone 18 series. Reports indicate a switch to wafer-level multichip modules (WMCM) for packaging Apple’s A20 and A20 Pro chips, alongside a potential transition to system-level integrated chips (SoIC) for Apple’s server technologies.

TSMC is setting up two dedicated facilities for producing A20 and server chips, denoted as P1 and AP6. The WMCM approach aims to compact chip components like CPU, GPU, and memory into a smaller footprint, facilitating efficient large-scale production. The venture’s success will depend on TSMC’s ability to output at scale from the P1 factory, anticipated to roll out 10,000 wafers monthly, with possible adoption beyond Apple.

Additionally, TSMC’s advanced SoIC technology, which stacks chips densely for improved performance, is likely to surface in Apple's forthcoming server chips and potentially in products like M5 Pro and M5 Max. These developments are geared for mass production at TSMC’s Zhunan AP6 plant, targeting capability expansion by 2025.