Apple has announced its intentions to transition further away from Chinese dependence by using chips made in Arizona.
Key Details
- As a part of the company’s plans to decrease its reliance on China, Apple plans to begin sourcing chips from a plant in Arizona.
- The plant is still under construction, but Apple should be able to receive chips from the plant by 2024.
- While announcing the change during an internal meeting, CEO Tim Cook also mentioned that the company was looking to source chips from Europe as well.
Why it’s news
Most likely, Cook is referencing the Taiwan Semiconductor Manufacturing Company’s (TSMC) new facility being built in Arizona. TSMC is currently Apple’s exclusive chip manufacturer.
For now, Apple sources its chips from TSMC facilities located in Taiwan.
Intel is also constructing a new chip facility in Arizona, but it is less likely that this is the facility Cook referred to. Intel was previously a supplier for Apple, but Apple has since changed its processors making them incompatible with Intel’s chips.
Apple’s semiconductor chips which power all of its devices are designed by the company and manufactured by TSMC. Moving Apple chip production to the U.S. would be a major step in Apple’s attempts to shift its supply chain.
However, there is some question of whether or not the Arizona facility will be able to produce Apple’s supply. TSMC previously said the facility will produce 20,000 5-nanometer chips per month. Apple is currently looking to transition to more advanced 3-nanometer chips.
Backing up a bit
Apple has been looking to transition away from China following supply chain disruptions during the Covid-19 pandemic.
Apple has just over 180 total suppliers, and now 48 of those suppliers are based in the U.S. That’s 25 more than last year. California was home to less than 10 of these manufacturers, but now it houses 30 of them.
Apple isn’t the only company reconsidering where it sets up manufacturing. Major chip manufacturers are moving to the U.S., largely motivated by new legislation that encourages U.S.-based production.
Despite the growing number of U.S. manufacturers, Apple is still predominantly dependent on East Asian production, especially China.
The pandemic may have changed this dynamic, however. During shutdowns, travel between Apple headquarters in California and Chinese manufacturing plants was difficult. Apple worked through these issues by using live-stream video chatting and depending on local engineers.
