Apple will use American-made chips from TSMC’s new Phoenix factory

Apple plans to use US-made processors after opening a state-of-the-art new chip factory in Phoenix, Arizona.

For the plant’s customers, including AMD and NVIDIA, the new facility means safer chip delivery and faster production timelines. The chipmaker, TSMC, also said today that it will begin construction of a second factory in Phoenix next year, which will increase annual output from the site.

“These chips will power iPhones and MacBooks, as Tim Cook can attest,” President Joe Biden said Tuesday at an event outside the Arizona plant. “Apple had to buy all the advanced chips from abroad. Now we are going to do more of their supply chain here at home.”

Biden and Apple CEO Tim Cook were on hand in Northern Phoenix for TSMC’s “tool-in” ceremony, marking the arrival of manufacturing equipment at the first facility.

“A masterful move and a groundbreaking development for the industry”

The factory is a large, modern building surrounded by newly paved roads and cacti that have survived bulldozing in the desert. At its first public event, TSMC welcomed customers, employees, local leaders and journalists to see its new plant, or at least the exterior of it.

TSMC is a dedicated foundry, meaning it builds the chips designed by other companies. Apple, AMD and NVIDIA are among the largest customers, and even Intel relies on TSMC to make the most advanced processors.

The first Phoenix factory will make 4nm processors (improved from the 5nm originally revealed), with production to begin in 2024. The second factory will come online in 2026 and produce 3nm chips, the smallest and most complex processors. in production today.

All told, TSMC said it will invest $40 billion in its Arizona capacity, which is one of the largest foreign direct investments ever made in U.S. manufacturing. The two plants will produce more than 600,000 wafers annually by 2026, which White House officials say will be enough to meet the entire U.S. demand for advanced chips.

Top executives from Apple, AMD and NVIDIA confirmed Tuesday that they would be among the first customers to buy chips from the new Arizona factories.

“TSMC has become a global platform upon which the global technology industry is built,” said Jensen Huang, CEO of NVIDIA. “Bringing TSMC investment to the United States is a masterstroke and a groundbreaking development for the industry.”

TSMC's first factory in Phoenix, Arizona.

TSMC’s first factory in Phoenix, Arizona.

The afternoon featured a slew of speakers hammering away at TSMC’s gravity coming to Arizona. TSMC employees in red shirts dispersed to a crowd of about 200 people, and the speeches were so numerous that there was even an intermission with a champagne toast to break things up.

Secretary of Commerce Gina Raimondo, Arizona Senator Mark Kelly and other members of the Arizona congressional delegation also attended the ceremony. They were joined by business leaders including Sanjay Mehrotra, CEO of Micron, Ganesh Moorthy, CEO of Microchip and Morris Chang, founder of TSMC.

TSMC customers have not disclosed how many chips they want to buy from these fabs, but at 3nm and 4nm the Arizona chips will be more advanced than what they currently use. Apple’s A16 chips used in iPhones 14 Pro and Pro Max and the M2 chips for MacBooks are both made with 5nm process technology.

But by the time these Arizona plants are both up and running, TSMC will already be manufacturing more advanced chips in overseas facilities. The company plans to produce 2nm chips by 2025according to Nikkei Asia.

“The progress we’ve made with Apple Silicon has transformed our devices,” Cook said Tuesday. “When you think about it, it’s extraordinary what chip technology can achieve. And now, thanks to the hard work of so many people, these chips can be proudly stamped ‘Made in America.’

The US is in the midst of a rebound in semiconductor manufacturing

The US is in the midst of a resurgence in semiconductor manufacturing, inspired in part by the snapped supply chains of the covid pandemic. The vast majority of the world’s semiconductors are produced in Asia and the US produce about 10 percent of the world’s semiconductors.

Apple has been working in recent years to expand its supply chain outside of China to avoid potential disruptions in the future. It now produces some iPhones in India and plans to expand MacBook and Apple Watch production to Vietnam. The TSMC factories don’t mean full-scale production of iPhone in the US, but they will provide critical components used in Apple products.

The semiconductor shortage cost Apple about $6 billion in lost sales, and the company recently said it plans to buy more chips from European and US factories to solve supply problems.

Recently, US politicians have been pushing to reduce production to avoid dependence on other countries.

This reshoring force culminated in the CHIPS and Science Act, a legislative package that includes $52 billion for domestic chip manufacturing. Biden signed the bill into law in August, but funding has yet to be disbursed.

The Department of Commerce distributes the money through her Program “Chips for America”., starting next year. Foreign companies are eligible for these incentives as long as they build U.S. manufacturing capacity, and TSMC has already done so declared public that it will apply for CHIPS funding.

Biden came to Phoenix to tout US manufacturing and the CHIPS and Science Act.

Biden came to Phoenix to tout US manufacturing and the CHIPS and Science Act.

Even without CHIPS funding, several major semiconductor projects are underway.

Intel, America’s largest chipmaker, has its largest production site in Chandler, a major Phoenix suburb. The company is make progress on a $20 billion expansion on the Chandler campus, which will be fully operational in 2024.

Intel also plans to build “the world’s largest silicon manufacturing facility” in Ohio, starting with a $20 billion investment. Intel has yet to disclose exactly what it will be building in Ohio, but production is expected to begin in 2025.

Micron, which makes memory and storage chips, said in October it will spend up to $100 billion on build a “mega fab” in New York City. In Texas, Samsung is investing $17 billion to expand its Austin facilities in hopes of matching TSMC.

Chang, the founder of TSMC, said during his remarks that he has long dreamed of building in America and that TSMC’s current chairman, Mark Liu, is finally bringing that dream to life.

“My dream of 25 years ago is now being fulfilled by Mark.”

Photography by Andy Blye.