Author: John Mac
Apple has taken a significant step toward minimizing its dependence on Asian-made device components. According to Bloomberg, Apple CEO Tim Cook announced during a meeting with employees in Germany that the company will start sourcing chips for its devices from an Arizona factory.
Cook also stated that Apple might increase its chip supply from European plants. This decision to source chips from an American factory comes after Apple encountered issues in Beijing that caused significant delays in the production and worldwide distribution of its iPhone 14.
A New Apple Chip Production Factory in the United States
Apple currently sources all of its semiconductor chips from Taiwanese factories. Despite the fact that the company designs its own chips, Taiwan Semiconductor Manufacturing Company (TSMC) produces most of the M-series and A-series processors that power its devices.
However, Apple is working to diversify its chip production by collaborating with a TSMC-run factory in the United States. According to Apple’s CEO, the company has decided to purchase from an Arizona plant beginning in 2024. This means Apple has about two years to get the plant up and running.
However, a burning question is whether the new Arizona factory will be able to meet Apple’s demands.
The Arizona plant, according to TSMC, will be able to produce approximately 20,000 5-nanometer chips per month. This would not meet Apple’s requirements because it requires advanced 3-nanometer chips for its devices. As a result, Apple may use chips manufactured in Arizona for simple components in its devices.
Furthermore, a second chip production facility in the United States is possible, as Apple is working hard to increase chip production. However, there are no official details on the second factory’s location.
U.S. Government Grants Incentives for Chips
It is no secret that there is a global chip shortage. Due to the shortage, the Japanese government committed approximately $5.2 billion in 2021 to offer support to chip manufacturers to help solve chip-related problems.
The U.S. government has also followed suit, providing approximately $50 billion in incentives as part of the Chips and Science Act to motivate manufacturers to increase processor production across the country.
This incentive has prompted companies such as Samsung and Apple to not completely rely on their factories in Taiwan, which produce approximately 60% of the world’s chips.
Politicians Express Concerns
American politicians have long been concerned about Apple’s reliance on Taiwan to source device components. These fears were confirmed when the company encountered COVID restrictions in China, disrupting supply chains and creating a significant consumer demand gap.
While Apple continues to address the COVID situation in China, it will collaborate with TSMC to establish a functional chip factory in the United States. The company will also benefit from the U.S. government’s incentive.
The Bottom Line
Apple intends to diversify its manufacturing base by collaborating with an Arizona factory. The company, which previously only worked with Taiwanese manufacturers, will now produce chips for its devices at a TSMC-led factory in the United States. Apple will also benefit from the $50 billion incentive the U.S. government provides to encourage more chip production within its borders and help combat the global chip shortage.