- TSMC has started producing chips for Apple at its Phoenix location, according to people familiar with the matter.
- This bodes well for the future of the U.S. chip industry, to which the Biden administration has pledged $52 billion.
- This is also an important step for TSMC, which has faced several staffing and construction challenges in Arizona.
TSMC, one of the world’s leading chipmakers, has started producing chips for Apple at one of its Phoenix semiconductor chip factories, two people familiar with the matter told Business Insider.
One of the people said it has not yet reached full production levels.
This suggests a boost to U.S. efforts to expand production of semiconductor chips, which have faced some challenges over the past few years.
Tim Culpan, an independent Taiwanese technology journalist, first reported the news last month.
Citing anonymous sources, Kalpan said TSMC has begun producing Apple’s A16 chips in “small but significant numbers.” This news marks a major development for TSMC. announced The company plans to invest billions of dollars and create thousands of jobs in Arizona in 2020.
Additionally, this comes as Apple CEO Tim Cook announced that the company will be TSMC’s “largest customer” at its first manufacturing facility in Arizona, using U.S.-made chips for the first time in nearly a decade. This was two years after.
A TSMC spokesperson declined to comment on the company’s work with Apple in the United States. Asked about the progress of the company’s first chip factory, a spokesperson said the project was “progressing well as planned” and on track to be fully operational in the first half of 2025.
Apple did not respond to a request for comment.
“Success story”
Dylan Patel, principal analyst at semiconductor research and consulting firm Semianalysis, said producing chips in the U.S. is an important milestone for Apple.
“Despite a lot of negative talk early on, this shows that the plant is on track and operating as expected, so this is a success story,” he said. told BI.
BI sources did not say which chips are being manufactured in Phoenix. Mark Muro, a senior fellow at the Brookings Institution, told BI that the reported start of production of the A16 chip, which has been used in several areas recently. iPhone modelis not new, but iPhone16 — This would be a very positive signal for the Apple-TSMC partnership.
“This suggests that Apple has enough faith in its new U.S. factory that it can quickly begin U.S. production of its most advanced mobile processors,” he said, adding, “Some observations… This is reassuring, given that investors remain skeptical that U.S. sites will ever reach TSMC standards.” . ”
TSMC’s Three Chip Building Efforts The factory at the Phoenix campus is key to the Biden-Harris administration’s efforts to expand U.S. production of chips that power everything from iPhones to washing machines. In 2022, President Joe Biden signed the CHIPS Act, which provides $52.7 billion for U.S. semiconductor research, development, manufacturing and workforce development. This includes $39 billion in manufacturing incentives for chip production in the United States. In addition to creating American jobs, the administration wants to secure supply chains and reduce America’s dependence on advanced chips made in Taiwan.
TSMC faces construction slowdown and worker tensions in Arizona
TSMC’s investment in Arizona hasn’t always been smooth sailing.
TSMC announced last year that the official opening of its first Arizona factory would be postponed from 2024 to 2025. Also, when the company announced plans to bring in engineers from Taiwan to train American workers, local labor unions in Arizona protested, fearing unfair treatment of American workers. Jobs will be threatened.
Management and safety concerns are also causing dissatisfaction among TSMC construction workers in Arizona. Workers have previously told BI that management challenges have contributed to construction delays, and some have accused the company of safety violations. TSMC previously told BI that it is committed to ensuring safe working conditions.
In 2022, the founder and former CEO of TSMC will be Morris Chan told the Brookings Institution that U.S. efforts to expand domestic chip production would be “futile, expensive and wasteful,” citing labor and cost issues.
Despite these issues, TSMC said in an April earnings call that progress at its first plant in Arizona is “on track.”
Semianalysis’s Patel said TSMC’s production of Apple chips is good news for Americans seeking employment in the industry. TSMC’s early success suggests it will continue to invest in the United States.
“This will drive job growth, not just for TSMC, but for the entire ecosystem: factory construction, equipment vendors, etc. needed to support the factories,” Patel said. “Modern factories are not particularly labor-intensive, but they require highly skilled workers and operate for decades, creating many high-quality, long-term jobs. .”
TSMC said it will charge customers more for chips made outside of Taiwan due to higher manufacturing costs. But Patel said he does not expect this to have a material impact on the price of Apple products.
“The U.S. government subsidy was intended to offset the difference in construction and other costs between Taiwan and the U.S. in order to keep TSMC afloat,” he said, adding, “Both Apple and consumers , you shouldn’t expect a price difference between these U.S.-made chips,” he added. ”
Going forward, chip makers such as TSMC will face another challenge: securing workers once they reach full capacity.
The U.S. semiconductor industry will face a shortage of an estimated 67,000 workers by 2030, including technicians, computer scientists and engineers, according to a report released last year by the Semiconductor Industry Association. However, Patel said he does not expect the workforce issue to have a particularly significant impact on TSMC’s production.
Mr. Muro was also optimistic. He said he thinks TSMC’s production of Apple chips bodes well for the future.
“This is an important sign that the U.S. push to revive high-quality chip manufacturing is well-founded,” he said.
Correction note: Correction: October 16, 2024 — A previous version of this article misstated one detail related to TSMC’s chip manufacturing. Business Insider’s sources did not say what type of Apple chips the company has started manufacturing in Phoenix. Independent journalist Tim Culpan previously cited sources identifying this as Apple’s A16 chip.
Do you work in the semiconductor industry and have a story to tell? To contact this reporter, please contact: jzikula@businessinsider.com.