Apple has committed to purchasing US-made chips once Taiwan Semiconductor Manufacturing Company’s (TSMC) Arizona plants become operational. However, these chips may come at a higher cost to Apple. TSMC’s chief executive has stated that the company plans to charge more for chips manufactured outside of Taiwan due to increased production costs.
Currently, Apple’s A-series and M-series chips are manufactured by TSMC in Taiwan. However, Apple has pledged to buy at least some of its chips from TSMC’s upcoming plants in Arizona. There were initial doubts about this move as the chip components seemed likely to be sent back to Taiwan for final assembly, a process known as ‘packaging’. This led one analyst to label the Arizona plant as “a paperweight.”
Packaging is a complex process where various circuit boards are placed as close together as possible before being encapsulated into a single chip. For instance, in the iPhone, the memory is placed directly on top of the processor to enhance performance and reliability. TSMC has a significant lead over its competitors in this advanced process, which can only be carried out in sophisticated facilities that currently only exist in Taiwan. However, Apple later announced that it would use another US company, Amkor, for chip packaging.
Producing chips in the US carries higher costs than in Taiwan, partly due to the unionization of US workers leading to higher salaries. This was the reason for TSMC demanding subsidies for opening the Arizona plants. These subsidies were recently confirmed as totaling $6.6 billion in grants across three plants, and a further $5 billion in loans. Despite this, there was a suggestion last year that US-made chips might be more expensive than those produced in Taiwan, and the company’s chief executive has now confirmed this.
Read more at: 9to5mac.com