Nvidia, Intel tout US chip supply chain; Blackwell packaging offshore

Nvidia and Intel highlighted the growth in the US chip supply chain, but noted that advanced packaging for high-demand chips, such as Nvidia's Blackwell, still occurs offshore. This indicates that despite efforts to increase domestic chip production, crucial steps in the manufacturing process remain reliant on international facilities.

This matters because it points to persistent vulnerabilities in the semiconductor supply chain. While chip fabrication may be moving stateside, the continued offshore packaging of advanced chips means the US still depends on foreign partners for critical stages, potentially affecting future availability and costs of essential AI components.

The mechanism involves the division of labor in chip manufacturing. Chips are designed, then fabricated (made) in foundries. After fabrication, they undergo advanced packaging, where the chip is integrated into a protective casing and connected to other components. This final, critical step for high-end chips is largely performed outside the US.

This situation primarily moves companies like Nvidia (NVDA) and Intel (INTC), as their ability to deliver cutting-edge chips depends on this global supply chain. It also affects other semiconductor firms and technology companies reliant on these advanced components, potentially impacting their product timelines and expenses due to supply chain complexities.