Apple Plans to Source Semiconductors from Arizona, USA Instead of Asia Starting 2024

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Apple is reportedly preparing to source semiconductors for devices such as the iPhone not from Asia but from Arizona, USA. This appears to be in consideration of the new U.S. factory of Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer) and a semiconductor supply partner. It seems that the Biden administration's support for manufacturing facilities is materializing into a stable supply chain for domestic companies.

On the 15th (local time), Bloomberg reported that Apple CEO Tim Cook made this statement during an internal meeting with engineers and retail staff in Germany while visiting Europe recently. Present at the meeting were Deirdre O'Brien, Senior Vice President of Retail and People, and Dea Q, Senior Vice President of Apple Services.

Cook said, "We have already decided to purchase quantities produced at the Arizona plant," adding, "The Arizona plant is scheduled to start mass production in 2024, so we have two years left. Maybe a little less than that." He also indicated the possibility of building semiconductor supply chains within Europe as well as the U.S., saying, "Within Europe, semiconductors should be sourced from Europe."

Cook's remarks are interpreted as considering TSMC's plans to build an advanced semiconductor factory in Arizona. TSMC is investing $12 billion (approximately 15 trillion KRW) to build a factory in Arizona and plans to mass-produce semiconductor products using the advanced 5-nanometer (nm; 1 nm is one-billionth of a meter) process starting in 2024. Apple is one of TSMC's key customers along with Qualcomm and Nvidia.

Intel, which is also building a factory in Arizona like TSMC, could be one of the suppliers mentioned by Cook, but Bloomberg reported that the possibility is low considering Apple has replaced semiconductors previously sourced from Intel with in-house developed components.

Apple CEO Tim Cook
Photo by Reuters Yonhap News

TSMC currently produces and supplies semiconductors such as processors designed by Apple in Taiwan. Cook said that over 60% of the world's processor supply is currently produced in Taiwan, adding, "I don't know how you feel about this, but 60% anywhere cannot be considered a strategic position." Given the supply chain disruptions caused by the COVID-19 pandemic and concerns about a possible Chinese invasion of Taiwan, it seems Apple has judged that it is necessary to reduce excessive dependence on Taiwan.

Bloomberg stated, "The remaining question is whether this factory (TSMC's Arizona plant) can meet Apple's demands," adding, "TSMC said it would produce 20,000 semiconductor wafers per month at this plant using a 5-nanometer process, but this will not satisfy Apple, which wants a 3-nanometer process in the future." Accordingly, there is speculation that TSMC might upgrade the originally announced process level or that Apple might receive semiconductors produced according to TSMC's Arizona plant capabilities to build the supply chain.

TSMC is reportedly considering expanding the Arizona plant. On the 9th, the Wall Street Journal (WSJ) reported, citing multiple sources, that TSMC plans to announce within months the construction of an additional state-of-the-art semiconductor factory near its existing Phoenix plant in Arizona. TSMC decided to invest $12 billion in building the Phoenix 1 plant, and a similar amount is expected to be invested in the new factory. This decision is interpreted as a response to increasing requests from major customers including Apple.

Bloomberg reported that Cook did not make separate remarks about where to source semiconductors in Europe. However, he said that semiconductor support laws in the U.S. and Europe are reshaping the semiconductor industry, and "we will see massive investments in production capacity and capability to readjust market shares in regions where silicon (semiconductor raw material) is produced in the U.S. and Europe."

This content was produced with the assistance of AI translation services.