Apple will source chips from new TSMC fabs in Arizona from 2024

Samuel Buchmann

7.12.2022

Translation: machine translated

The Taiwanese chip manufacturer TSMC is building two factories in Arizona - one for 4-nanometre and one for 3-nanometre processors. Apple is one of the first customers. Nevertheless, the dependence on Taiwan remains.

The first new factory of the Taiwanese chip manufacturer TSMC is scheduled to start production in Arizona in 2024. It will produce processors using 4-nanometre technology. A second production facility for 3-nanometre chips will follow in 2026, according to a statement by TSMC. Apple will be among the first customers, said CEO Tim Cook at the construction start-up ceremony in Arizona.

Originally announced was only a factory for less complex 5-nanometre chips. Apple currently uses these in its latest iPhones and MacBooks. In the next generations, however, they will rely on 4 and 3 nanometres. Apple had therefore urged TSMC to build such factories in the US instead - apparently successfully, as it now turns out. TSMC is investing a total of 40 billion US dollars in Arizona. This is one of the largest foreign investments in the history of the United States.

Dependence on Taiwan remains

Until now, all TSMC chips have been made in Taiwan. This dependence is dangerous for manufacturers like Apple, as the island nation is at the centre of geopolitical crises. The factories in the USA therefore also have political relevance. US President Joe Biden travelled to Arizona to mark the start of construction. "These investments help us build and strengthen the manufacturing chain here in America," Biden said.

Compared to the fabs in Taiwan, however, the capacity in Arizona will remain small. 600 000 wafers per year are planned at the new production facilities. In Taiwan, TSMC produces more than 20 million wafers annually - although this figure also includes older generations of chips. In addition, when the new fabs in the US start production, TSMC will probably already be producing even more advanced 2-nanometre chips in Taiwan.

Apple seeks to shift production chains away from China

It is not only in chips that Apple is trying to build more independence from China: The Wall Street Journal reports that the iPhone maker is looking to diversify towards India and Vietnam. The plans have recently received even more impetus. Reasons include production losses at Foxconn's iPhone factory in Zhengzhou due to China's restrictive covid policy and subsequent unrest. Apparently, this is why there are delivery backlogs for the iPhone Pro.

Meanwhile, the situation seems to be easing somewhat - China has ended the lockdown in Zhengzhou after heavy protests by the population. The iPhone factory will nevertheless not return to full production capacity until the turn of the year, according to Foxconn, as the Reuters news agency reports.

Samuel Buchmann

Senior Editor

Samuel.Buchmann@digitecgalaxus.ch

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