AlwaysFree: Apple Prepares To Get Made-In-US Chips In Pivot From Asia

• Company plans to source chips from Arizona plant in 2024
• CEO Tim Cook makes comments about expansion during meeting

According to Bloomberg’s article published on November 16, 2022, Apple Inc. is preparing to begin sourcing chips for its devices from a plant under construction in Arizona, a major step toward reducing reliance on Asian production.

Chief Executive Officer Tim Cook made the disclosure during an internal meeting in Germany with local engineering and retail staff as part of a recent tour of Europe, according to remarks reviewed by Bloomberg News. He added that Apple could also increase the supply of chips from its plants in Europe.

“We’ve already decided to buy out a plant in Arizona, and that plant in Arizona starts in ’24, so we’ve got about two years ahead on that, maybe a little less,” Cook told employees. Said to. “And in Europe, I’m sure we will be buying from Europe as those plans become more clear,” he said at the meeting, which also included Eddy Cue, head of Apple services, and Deirdre O’Brien, head of retail and human resources. Were. ,

Cook is likely referring to an Arizona factory that will be run by Taiwan Semiconductor Manufacturing Co., Apple’s exclusive chip-manufacturing partner. That plant is slated for a 2024 opening. And TSMC is already eyeing a second US facility, part of a broader push to increase chip production in the country.

Intel Corp is also building a plant in Arizona that will open in early 2024. The chipmaker was a major Apple supplier for years, but it’s unlikely to regain that business. Apple has swapped out Intel processors in Macs and other products in favor of its own components, and the chipmaker has an unproven track record of building off other companies’ designs.

The US government’s roughly $50 billion stimulus to encourage semiconductor manufacturing to expand to the state is part of legislation known as the Chips and Science Act. The iPhone maker currently produces its device processors from TSMC plants located in Taiwan, which account for a major part of the production. During the meeting, Cook said that 60% of the world’s processors are supplied from Taiwan.

“Regardless of what you feel and think, 60% coming out of nowhere is probably not a strategic position,” he said.

Processors are at the heart of almost every Apple product, be it the high-end Mac Pro desktop computer, the iPhone or the AirPods. The chips are designed by Apple and then manufactured by TSMC. After years of relying on Asia, bringing even a portion of that production back to the US would be an important step.

One looming question is whether the factory as planned is well suited to Apple’s needs. The Taiwanese company has said that the plant will initially have a capacity of 20,000 chips per month and will use a 5-nanometer production process. It won’t satisfy Apple’s near-future desire for more advanced, 3-nanometer chips.

TSMC could theoretically begin advanced production more quickly than has been announced so far. Apple could potentially use Arizona production for less complex components in its devices.

While most final assembly for Apple products is done in China and surrounding countries in Asia, Apple has a slew of suppliers that manufacture components domestically. The Cupertino, California-based company has said that Mac Pro models sold in the US are assembled in Texas.

Like the US, Europe is offering incentives to spur more chip manufacturing. In his remarks, Cook did not specify where in Europe the company might obtain additional chips, but Bloomberg News has reported that TSMC is in discussions with the German government about setting up a plant in that country.

Apples are growing a lot in Germany. The company has several hundred local engineers who work with Qualcomm Inc. on iPhones. Trying to replace the components with a home cellular modem.

Broadly speaking, the Chips and Science Act and complementary efforts in Europe are poised to reshape the chip industry, Cook said during the meeting in Germany.

“I think you will wind up seeing a significant investment in capacity and capability, both in the United States and Europe, to try to recapture market share where the silicon is produced.”

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