Apple will use TSMC's Arizona fab that is currently under construction and set to come online in 2024 to make its chips, the company's head Tim Cook told employees at an internal meeting in Germany, reports Bloomberg. The decision will lower Apple's reliance on TSMC's production capacities in Taiwan, though the company will likely continue to source top-of-the-range system-on-chips from Taiwan.
"We have already made a decision to be buying out of a plant in Arizona, and this plant in Arizona starts up in '24, so we've got about two years ahead of us on that one, maybe a little less," Tim Cook is quoted as saying. "And in Europe, I'm sure that we will also source from Europe as those plans become more apparent."
Given the tensions between China, Taiwan, and the U.S., producing the majority of chips in Taiwan may now be deemed a geopolitical risk. The head of Apple wants to reduce risks for the company, though it will continue to rely on TSMC.
Apple is TSMC's biggest customer that has been outsourcing most of its chip production to TSMC since 2014. As a result, the company tends to adopt TSMC's latest manufacturing technologies. It will reportedly be the first adopter of the foundry's N3 (3nm-class) fabrication process to make SoCs for Apple's 2023 premium products. Meanwhile, TSMC's fab in Arizona will make chips using the company's N5 production nodes, including N5, N5P, N4, N4P, and N4X.
An important question about Apple's sourcing of chips from TSMC's Arizona fab is what kind of chips the company plans to make. Apple currently uses N5, N5P, and N4 to make various SoCs for its mobile devices and PCs. Still, the question is whether the company's products in 2024 ~ 2025 will continue to rely on existing application processors.
Apple tends to use its SoCs for years after introducing various products. For example, the A14 Bionic chip used for iPhone 12 is now in the 10th Generation iPad. Other previous-gen smartphone SoCs power devices like Apple TV set-top-boxes (A15 Bionic) or Studio Display LCD (A13 Bionic). Apple might keep using existing SoCs for some of its products even in 2024 – 2025 (though we are speculating). Also, Apple has a plethora of miniature SoCs and system-in-packages (SiPs) for its headsets and watches, so potentially the company could outsource them to TSMC's fab in Arizona, provided that there are appropriate packaging services in the U.S., too (again, we are guessing).
There is another possibility too. Since the industry embraces multi-chiplet SiPs, Apple could make some chiplets in Taiwan on TSMD's leading-edge node and some in the U.S. on a mature node. That would not reduce the company's geopolitical risks per se but will at least increase the portion of its silicon produced in the U.S.
Neither Apple nor TSMC commented on the story since production plans are among the best-kept trade secrets.
