On February 24, the Wall Street Journal published an article on Monday, revealing the inside story of Apple’s efforts to build locally manufactured chips in the United States. The article stated that Apple is using its procurement capabilities and investments to promote domestic chip production in the United States, including TSMC’s Arizona factory, to diversify the supply chain.
TSMC Arizona factory
About 30 minutes' drive north of Phoenix, in a desolate patch of land dotted with cacti, more than 30 tower cranes stand on a construction site. The area of this construction site is 2.5 times the size of New York's Central Park. A giant chip manufacturing plant is rising from the ground, carrying the United States' hope of revitalizing this key industry.
The factory's biggest customer is Apple, which is using its vast purchasing power to help boost U.S. chip production. The company is seeking to diversify its supply chain, fight for tariff exemptions and echo calls from two presidents to help the United States reduce its reliance on foreign suppliers for the technologies that are the foundation of the modern economy.
The site is being built by TSMC, the world's largest chipmaker. The company plans to spend $165 billion to build six chip factories and more facilities, making it one of the largest construction projects in the United States.
Under pressure from the Trump administration, Apple last year pledged to invest $600 billion in the United States over the next four years. Much of this spending has nothing to do with manufacturing. It covers all of Apple's U.S. spending, including pay for tens of thousands of Apple employees and retail workers.
However, David Tom, Apple's head of global procurement, said that investment commitment also includes more than 100 million chips that Apple plans to purchase from TSMC's Arizona factory this year. "We will source as much of the output of this plant as possible," he said of the chip manufacturing plant.
Relative to the global chip supply chain, Apple's efforts to push its chip supply chain back to the United States are limited in scale. Moreover, the chips Apple buys from the factory account for only a small portion of its total chip needs. Chips are key components that power Apple devices.
Nonetheless, judging from the scale of construction by TSMC and other suppliers, Apple’s efforts to push the chip supply chain back to the United States have begun to bear fruit. The Wall Street Journal accompanied Apple executives to visit related facilities in the deserts of the southwestern United States to learn first-hand how these facilities are constructed with the help of Apple's purchasing power and investment.
Procurement plus investment
Apple is investing billions in suppliers, including companies that make device glass in Kentucky, companies that recycle rare earth magnets in California and companies that make silicon components in Texas. Apple executives said in an exclusive interview that an AI server facility operated by Foxconn will begin producing Mac Minis.
The race to rebuild the U.S. semiconductor supply chain stems from the excessive concentration of chips in Taiwan, China. Currently, the vast majority of the world's most advanced chips are produced in Taiwan, China, which has triggered concerns in the United States.
From missiles and fighter jets to smartphones, AI servers, home appliances and even electric toys, chips are everywhere. During the COVID-19 pandemic, Americans have struggled to buy new cars, in part because of disruptions in the supply of chips.
Therefore, the U.S. government has adopted a "carrot and stick" strategy, putting pressure on companies while providing financial incentives to promote the construction of the domestic semiconductor industry. At the same time, major chip buyers are also pushing for domestic supply to reduce dependence on Taiwan, which may face high tariffs and is prone to major earthquakes.
Global Wafer is one of the beneficiaries of Apple’s supply chain influence. The Taiwanese company processes raw silicon material into blank wafers, and companies like TSMC etch trillions of transistors onto those wafers to ultimately create chips. Last year, Global Wafer opened a new factory in Sherman, Texas.
Global Wafer's Texas plant is cutting silicon ingots
The quarter-mile facility begins with a digital-age Stonehenge-style shop floor, where 35-foot-tall equipment is used to create torpedo-shaped silicon ingots weighing hundreds of pounds. These silicon ingots are then cut into wafers, polished, packed into special shipping containers to ensure that their delicate properties are not damaged, and then sent to various links in the chip supply chain.
Mark England, president of Global Wafer's U.S. business, said Apple is pushing TSMC and other chipmakers to use the company's wafers to help them expand sales. England said the company hopes to expand the factory more quickly with Apple's support, in part to take advantage of tax credits.
Apple designs its own chips and TSMC manufactures them. Apple has helped establish TSMC as the world's dominant chipmaker by committing to TSMC's leading process technology in its designs. This gives TSMC the confidence to invest huge sums of money in the factories required for each new generation of chips.
"The role we play for the entire industry is that by working with TSMC, we can quickly push a certain process node to mass production and achieve high yields, and then when we move to the next node, other manufacturers will follow." said Tom, Apple's head of global procurement.
If the final plan is completed, TSMC's Arizona factory will form a "company city" covering an area of more than 2,000 acres. Currently, one factory has been built and put into chip production, the second will be put into production next year, and the third is still a steel structure skeleton and is expected to be completed by 2030. TSMC also plans to build three more factories. Apartment buildings and a Costco supermarket will also be built near the plant.
Despite TSMC's size in Arizona, it still lags behind its factories in Taiwan in terms of production capacity and process technology. TSMC currently has four factories in Taiwan with a monthly output of more than 100,000 wafers, as well as seven smaller factories. The company said the Arizona site won't be able to achieve similar production levels until all six plants are built.
In addition, the world's most advanced chips are still produced in Taiwan, China, and their transistor sizes are currently as small as 2 nanometers. The smaller the size of the transistor, the more computing power the chip can integrate. In Arizona, TSMC currently produces 4-nanometer and 5-nanometer chips, and will not be able to produce 2-nanometer chips until 2030.
The "brains" of the main chips used in the latest iPhones and Macs require more advanced process technology. Although there are dozens of chips inside Apple devices, many of them still use more mature technology. Advanced AI chips also use mature process technology. Some of Nvidia's Blackwell processors are produced at TSMC's Arizona plant.
Amkor Technology strives to build packaging factory
Not far from the TSMC plant, another construction site covering more than 100 acres is under construction. Amkor Technology is planning two chip "packaging" factories here with the help of Apple's investment. When the first factory is completed in 2027, it will receive wafers from TSMC, cut them into individual chips and add connectors to enable the chips to be installed into devices. Amkor Technology said it would invest US$7 billion in the factory, but declined to disclose Apple's specific investment scale.
The supply chain ends at vast assembly plants where Apple and its contract partners produce hundreds of millions of devices every year. Apple has cooperated with Foxconn to build a moderate-scale AI server production line in Houston. The server will provide computing power support for more AI features added to Apple devices. This production line can produce about 10 servers per hour
Apple assembles servers in Houston
Apple has also tried manufacturing its high-end desktop computer, the Mac Pro, in Austin, Texas. The production line has been reduced in size since it was put into operation in 2013. The project is struggling due to low market demand and challenges with U.S. workers, according to people familiar with the matter.
Assembling a Mac Mini
Now, Apple is expanding production in Houston, where it plans to assemble another desktop computer: the Mac Mini. Later this year, it will work with Foxconn to convert a huge warehouse at the factory into more than 200,000 square feet of production space.
Apple COO Sabih Khan said the company is more confident in its plans to build the Mac Mini in Houston than the Mac Pro project in Austin, in part because it has higher and more stable market demand.
According to estimates from research firm Consumer Intelligence Research Partners, Apple's iPhone sales are hundreds of times that of the Mac Mini, but Apple has no plans to move iPhone assembly operations back to the United States. Sabih Khan said Apple is focusing on starting with relatively simple reshoring goals.
“We are highly focused on areas that we believe are critical to future innovation and will continue to differentiate our products,” he said. “These include critical components, subassemblies and advanced silicon chips.”