As the United States government works hard to build manufacturing in the country, Apple announced the company will make computer chips in Arizona beginning in 2024. Apple CEO Tim Cook reported that TSMC, the company that manufactures the chips for Apple products, is building a foundry in a suburb of Phoenix, Arizona.
Building Apple Products in the United States
TSMC began manufacturing 4nm chips for other companies when it built a foundry in 2022. The company is also expected to produce 3nm chips for mobile devices like iPhones and iPads. What is unknown is whether TSMC will make these smaller chips in Arizona or elsewhere.
Along with the chips, Apple will need manufacturers to build models for cellular and WiFi systems. It will also need a domestic company to manufacture chips for Bluetooth and GPS as well as RF modems. Apple might be turning to TSMC for all connectivity manufacturing, which could lead TSMC to open more manufacturing centers.
Currently, Apple is using Qualcomm to manufacture modems and other connectivity pieces. The last contract with Qualcomm is for the 2023 iPhone 15 collection, with the goal of TSMC becoming the domestic production center in 2024 or 2025.
What is TSMC?
TSMC, or Taiwan Semiconductor Manufacturing Company, has worked with Apple for years, making A-series chips for iPhones and M-series chips for Macs. This company might have its home office and manufacturing centers in Taiwan, but it has several design centers in the United States.
Opening a manufacturing center in Arizona will create more jobs in the US, and it speeds up the supply chain domestically. While we don’t love the fact that it’s a Taiwanese company, the United States manufacturing sector benefits from opening this facility in Arizona.
Tim Cook of Apple said the company has about two years to prepare for the manufacturing shift, as he expects the ship plant in Arizona to open in 2024, and possibly sooner. Cook also shared details about the Arizona plant potentially making chips for European iPhones. Apple has moved some production to India, intending to centralize manufacturing in the United States.
Opening a chip factory in the United States provides a backup if any problems arise in Taiwan. Centralizing production in Arizona protects Apple from supply chain issues. The cost of manufacturing Apple products could fall, especially if the company no longer needs to move parts and goods around the world to build the phones in one location.
Slowing the Reliance on Chinese-Produced Goods
The Biden administration has challenged businesses to open manufacturing plants in the United States, pushing Apple to set a new standard for American-made products. The COVID-19 pandemic showed weaknesses in supply chain production after China’s strict lockdown policies.
Companies that relied on parts and goods made in China lost business as they waited for products to arrive in US ports. To avoid similar problems in the future, the government is awarding incentives to those that begin manufacturing in the United States. India has a similar policy after they suffered the same problems, especially from Chinese chip companies.
We’ll see if these incentives result in meaningful change.
Image credit: TSMC