Thu, Nov 17, 2022 page12

• Apple prepares for made-in-US chips

  TAIWAN’S DOMINANCE: Apple CEO Tim Cook said that 60 percent of the world’s processor supply is from Taiwan, a situation that ‘is probably not a strategic position’

  • Bloomberg
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  Apple Inc is preparing to begin sourcing chips for its devices from a plant under construction in Arizona, marking a major step toward reducing the company’s reliance on Asian production.

  Apple chief executive officer Tim Cook made the disclosure during an internal meeting in Germany with local engineering and retail employees as part of a recent tour of Europe.

  Apple might also expand its supply of chips from plants in Europe, Cook said.

  

  Apple chief executive officer Tim Cook gestures at an Apple Store in New York on Sept. 16.

  Photo: Reuters

  “We’ve already made a decision to be buying out of a plant in Arizona, and this plant in Arizona starts up in [20]24, so we’ve got about two years ahead of us on that one, maybe a little less,” he said.

  “And in Europe, I’m sure that we will also source from Europe as those plans become more apparent,” he said at the meeting, which was also attended by Apple senior vice president of Internet software and services Eddy Cue and Deirdre O’Brien, its head of retail and human resources.

  Cook is likely referring to an Arizona factory that would be run by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Apple’s exclusive chip-manufacturing partner.

  That plant is slated for a 2024 opening.

  TSMC is already eyeing a second US facility, part of a broader push to increase chip production in the country.

  Shares of TSMC climbed as much as 2.9 percent in Taipei trading yesterday after reports on Cook’s remarks were published.

  The stock closed up 1.46 percent yesterday following a surge of 7.87 percent on Tuesday after Warren Buffett’s Berkshire Hathaway Inc disclosed it had taken a stake in the company.

  Representatives for Apple and TSMC declined to comment.

  Intel Corp is also building plants in Arizona that are to open as early as 2024.

  Intel was a major Apple supplier for years, but it is unlikely to recapture 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 manufacturing other companies’ designs.

  The iPhone maker sources its device processors from TSMC plants in Taiwan, which has an outsized share of production.

  During the meeting, Cook said that 60 percent of the world’s processor supply comes out of Taiwan.

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

  Processors are at the heart of nearly every Apple product, whether it is the high-end Mac Pro desktop computer, the iPhone or even AirPods. The chips are designed by Apple and then manufactured by TSMC. Bringing even a portion of that production to the US — after years of relying on Asia — would be a significant step.

  A lingering question is whether the factory as planned is suited to Apple’s needs.

  The Taiwanese company has said that the plant would initially have a capacity of 20,000 chips per month and use a 5-nanometer production process.

  That would not satisfy Apple’s near-future desire for more advanced 3-nanometer chips.

  TSMC could theoretically introduce advanced production more quickly than it has so far announced.

  Apple also could potentially use the Arizona production for less complex components in its devices.

  While most of the final assembly for Apple products is handled in China and other countries in Asia, Apple does have a set of suppliers that manufacture components in the US.

  The Cupertino, California-based company has touted that Mac Pro models sold in the US are assembled in Texas.

  Like the US, Europe has been offering incentives to spur more chip manufacturing.

  In his remarks, Cook did not specify where in Europe the company might get additional chips from, but Bloomberg News has reported that TSMC is in discussions with the German government about establishing a plant in that country.

  Apple is growing significantly in Germany.

  It has several hundred local engineers working on an effort to replace Qualcomm Inc components in iPhones with a homegrown cellular modem.

  More broadly, the US Chips and Science Act, and the complementary effort 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 capability and capacity in both the United States and Europe to try to reorient the market share of where silicon is produced,” he said.

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