Apple confirms it will buy chips made in the U.S.A
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Confirming rumors that we first reported last month, Apple CEO Tim Cook spoke this morning in Arizona and said that Apple will buy chips made in the U.S. by TSMC. The world’s largest chip foundry will start producing chips at its U.S. fab in 2024 and Apple has been looking to reduce its reliance on chips produced at TSMC’s Taiwan facilities.
After all, as TSMC’s largest customer (responsible for about a quarter of the firm’s annual revenue), Apple has to be sensitive to reports that China has been eyeing Taiwan. And while U.S. President Joe Biden has promised to help Taiwan defend itself, any type of military conflict will make it harder for Apple to obtain the chips it needs. So to help Cook, other Apple executives, and iPhone fans sleep better at night, the decision has been made by Apple’s CEO to purchase chips made in the USA.
Tim Cook said, “And now, thanks to the hard work of so many people, these chips can be proudly stamped Made in America. This is an incredibly significant moment.” And the executive is 100% correct. The U.S. has been looking to become self-sufficient when it comes to semiconductors and the ability to churn out cutting-edge chips on U.S. soil is a massive step toward that goal.
TSMC originally planned on spending $12 billion on its Arizona plant which was expected to turn out 5nm chips by 2024. Now, TSMC will add a second factory and will spend $40 billion on the pair. The second facility will be ready by 2026. The fabs will turn out 600,000 wafers each year which will be enough to meet American demand according to the National Economic Council.
The 600,000 wafers made in the U.S. will be a small percentage of what TSMC turns out in Taiwan where production in 2020 came to 12 million wafers. Joining TSMC is Intel. The American chipmaker has already said that it will surpass TSMC and Samsung in process leadership by 2025 and is planning on building new fabs in Arizona and Ohio in an attempt to win business from Apple. Both TSMC and Intel’s plants will be partially subsidized by the U.S. government under the CHIPS act.
Ronnie Chatterji, National Economic Council acting deputy director for industrial policy, said today, “It’s the foundation of our personal electronics, and also the future of quantum computing and AI. At scale, these two [factories] could meet the entire U.S. demand for U.S. chips when they’re completed. That’s the definition of supply chain resilience. We won’t have to rely on anyone else to make the chips we need.”
Questions & Answers
Q.What is the primary reason for Apple deciding to purchase chips made in the U.S.?
What is the primary reason for Apple deciding to purchase chips made in the U.S.?
A.
Apple has been looking to reduce its reliance on chips produced at TSMC's Taiwan facilities. This decision helps Apple manage the risk of potential military conflict impacting its chip supply from Taiwan.
Q.How much is TSMC investing in its U.S. Manufacturing plants, and when will they be operational?
How much is TSMC investing in its U.S. Manufacturing plants, and when will they be operational?
A.
TSMC will invest a total of $40 billion in its U.S. Plants. The first factory is expected to produce chips by 2024, with the second facility ready by 2026.
Q.How significant will the U.S. Chip production be compared to TSMC's output from Taiwan?
How significant will the U.S. Chip production be compared to TSMC's output from Taiwan?
A.
The U.S. Fabs will produce 600,000 wafers annually, which is a small percentage of TSMC's Taiwan production. In 2020, Taiwan facilities turned out 12 million wafers.
Q.Which other major chip manufacturer is also expanding U.S. Production and seeking Apple's business?
Which other major chip manufacturer is also expanding U.S. Production and seeking Apple's business?
A.
Intel is also planning to build new fabs in Arizona and Ohio. The American chipmaker aims to surpass TSMC and Samsung in process leadership by 2025 and win business from Apple.
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