- - Most AI chips are made in Taiwan by Taiwan Semiconductor Manufacturing Company.
- - Startups focused on lowering the cost of AI are working with US manufacturers.
- - AI chips are being made at fabrication facilities in New York and Arizona.
Nvidia and most of its competitors don't produce their own chips. They vie for capacity from the world's most advanced chip fabricator: Taiwan Semiconductor Manufacturing Company. Nvidia may largely control which companies get the latest and most powerful computing machines, but TSMC decides how many Nvidia can sell. The relationship between the two companies fascinates the industry.
But the bottom line is that there's no manufacturer better and there's no getting ahead of Nvidia for the types of manufacturing capacity relevant to AI.
Still, a few startups think they can find an advantage amid Nvidia's dominance and the ever-fluctuating dynamics surrounding the island nation of Taiwan by tapping chip fabs in the United States.
Positron AI, founded by Thomas Sohmers in 2023, has designed a chip architecture optimized for transformer models — the kind on which OpenAI's GPT models are built. With faster access to more memory, Sohmers claims Postiron's architecture can compete on performance and price for AI inference, which is the computation needed to produce an answer to a query after a model has been trained.
Positron's system has "woefully less FLOPS" than an Nvidia GPU, Sohmers joked. However, his architecture is intended to compensate for this with efficiency for Positron and its customers.
Smaller fabs are 'hungrier'
Positron's chips are made in Chandler, Arizona, by Intel-owned firm, Altera.Intel acquired Altera, which specializes in a specific type of programmable chip, in 2015. In 2023, some early Positron employees and advisors came from Altera — bringing relationships and trust. The early partnership has given Positron some small influence over Altera's path and a cheaper, more flexible manufacturing partner.
The cost of AI comes from the chip itself and the power needed to make it work. Cutting costs on the chip means looking away from TSMC, Sohmers says, which currently holds seemingly infinite bargaining power.
"Fundamentally, Positron is trying to provide the best performance per dollar and performance per watt," Sohmers said.
Compared to other industries, AI offers a rare proposition: US production is often cheaper.
"In most other industries, made in the USA actually means that it's going to be more expensive. That's not the case for semiconductors — at least for now," Sohmers said.
Many fabs are eager to enter the AI game, but they don't have the same technical prowess, prestige, or track record, which can make finding customers challenging.
Startups, which often lack the high order volumes that carry market power, are a good fit for these fabs, Sohmers said. These less in-demand fabs offer more favorable terms, too, which Sohmers hopes will keep Positron competitive on price.
"If I have some optionality going with someone that is behind but has the ambition to get ahead, it's always good from a customer or partner perspective," he said, adding, "It gives both leverage."
Taking advantage of US fabs has kept the amount of funding Positron needs within reason and made it easier to scale, Sohmers said.
Positron isn't alone. Fellow Nvidia challenger Groq partners with GlobalFoundries in upstate New York and seeks to make a similar dent in the AI computing market by offering competitive performance at a lower price.
Less inherent trust
It's not all upside though. Some investors have been skeptical, Sohmers said. And as an engineer, not going with the best fab in the world can feel strange."You have a lot more faith that TSMC is going to get to a good yield number on a new design pretty quickly and that they have a good level of consistency while, at other fabs, it can be kind of a dice roll," he said.
With a global supply chain, no semiconductor is immune from geopolitical turmoil or the shifting winds of trade policy. So, the advantages of exiting the constantly simmering tension between Taiwan, China, and the US serve as a counterweight to any skepticism.
Positron is also working on sourcing more components and materials in North America, or at least outside China and Taiwan.
Sourcing from Mexico, for example, offers greater safety from geopolitical turmoil. The simpler benefit is that shipping is faster so prototyping can happen quickly.
It's taken a while, but Sohmers said the industry is waking up to the need for more players across the AI space.
"People are finally getting uncomfortable with Nvidia having 90-plus percent market share," he said.
