As Apple diverts to American-made chips, its supplier TSMC triples US investment

• In a significant move in reducing its reliance on Asia-based manufacturing, Apple said it will source chips in the US for the first time in nearly a decade.
• The plan for Apple is to expand its relationship with TSMC when the US factory opens in 2024. 
• Meanwhile, TSMC plans to more than triple its investment in Arizona, where it is building a US$12 billion chip facility, to US$40 billion to build a second, even more advanced plant there.

At this point, it is not a surprise that Apple Inc, the maker of iPhones, is the largest customer to the world’s largest chip maker Taiwan Semiconductor Manufacturing Co (TSMC). In fact, there were reports from earlier this year that had exposed TSMC‘s top 10 revenue contributors and Apple appeared at the top by a wide margin. For the financial year 2021, Apple accounted for over 25% of TSMC’s revenue. No other company even comes close.

For months, there have been reports and updates indicating that Apple is actively seeking to reduce the reliance on Asia-based manufacturing. This week, CEO Tim Cook confirmed that the iPhone maker will now be building chips in the US — the most significant move in almost a decade. However, that doesn’t mean it is walking away from TSMC, its biggest chip supplier.

In fact, it will expand its relationship with TSMC, which already produces chips for the iPhone maker, when the Taiwanese giant’s US factory opens in 2024. “As many of you know, we work with TSMC to manufacture the chips that help power our products all over the world,” Cook said, according to Bloomberg. “And we look forward to expanding this work in the years to come — as TSMC forms new and deeper roots in America.”

Alongside Cook at the site of a TSMC plant, President Joe Biden added that “Apple had to buy all the advanced chips from overseas. Now, they’re going to bring more of their supply chain here at home. It could be a game changer.” Cook then emphasized that the Apple silicon chips found in most of its devices will be built at the Phoenix plant. “Thanks to the hard work of so many people, these chips can be proudly stamped ‘Made in America,” he said.

The initial plan was that the Arizona plant by TSMC will only build chips in small quantities for Apple and that plant is slated for a 2024 opening. Later, the Taiwanese company said it will also commit to adding a second nearby plant, part of a broader push to increase chip production in the country. In lieu of the expansion, the world’s biggest contract chipmaker announced this week that it will increase its investment in Arizona, where the US$12 billion chip facility is being built, to US$40 billion to build the second, even more advanced plant there. 

The additional facility will begin operation by 2026 and will be the first plant in the US to make 3nm chips, the most advanced currently available, a White House official said. In line with the plan, TSMC will also increase its workforce in Arizona to 4,500, from an initial plan of 1,600, the company said. For context, the first plant by TSMC, which is slated to begin production in 2024, will produce 4nm chips of the kind Apple used for iPhone 14 Pro processors. 

Once that plant and the 3nm facility are operating at full capacity, TSMC’s total output in Arizona will be 60,000 wafers per month, triple its original plan of 20,000. “When complete, TSMC Arizona will be the greenest semiconductor manufacturing facility in the United States producing the most advanced semiconductor process technology in the country, enabling next generation high-performance and low-power computing products for years to come,” TSMC Chairman Mark Liu said in a statement released Tuesday. 

 

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