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

Apple plans to start using American-made processors after opening a new upgraded chip factory in Phoenix, Arizona.

For the plant’s customers, which include AMD and NVIDIA, the new facility means a more secure supply of chips and faster production schedules. Chipmaker TSMC also said today that it will begin construction of a second factory in Phoenix next year, increasing annual output at 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 factory. “Apple had to outsource all the advanced chips. Now we’re going to do more of their supply chain here in house.”

Biden and Apple CEO Tim Cook attended a “tooling” ceremony marking the arrival of manufacturing equipment at TSMC’s first facility north of Phoenix.

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

TSMC is a custom foundry, meaning it makes chips made by other companies. Apple, AMD and NVIDIA are among its biggest customers, and even Intel relies on TSMC to produce its most advanced processors.

The first Phoenix fab will produce 4nm processors (an upgrade from the previously announced 5nm), with production starting in 2024. The second fab will come online in 2026 and produce 3nm chips, the smallest and most complex processors in production today.

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

Senior executives from Apple, AMD and NVIDIA confirmed Tuesday that they will be among the first customers to buy chips from the new Arizona fabs.

“TSMC has become the global platform on which the world’s technology industry is built,” said NVIDIA CEO Jensen Huang. “Bringing TSMC’s investment to the US is a masterful and game-changing development for the industry.”

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

TSMC hasn’t revealed how many chips customers plan to buy from these fabs, but at 3nm and 4nm, the Arizona chips will be more advanced than what they’re currently using. The A16 chips used in Apple’s iPhone 14 Pro and Pro Max and the M2 chips for MacBooks are both created with 5nm process technology.

Still, both those Arizona fabs are up and running, and TSMC will already be making more advanced chips at overseas facilities. The company plans to produce 2-nanometer chips by 2025 Nikkei Asia.

“The progress we’ve made with Apple Silicon has transformed our devices,” Cook said Tuesday. “When you stop and 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 labeled “Made in America.”

The U.S. is in the midst of a semiconductor manufacturing revival, inspired in part by the creaky supply chains of the covid pandemic. The vast majority of the world’s semiconductors are produced in Asia, while the United States produces about 10 percent of the world’s semiconductors.

Apple has worked over the past few years to expand its supply chain outside of China to prevent possible future breaches. It now manufactures some iPhones in India and plans to expand MacBook and Apple Watch production in Vietnam. The TSMC factories do not mean full-scale iPhone production in the US, but they will provide critical components used in Apple products.

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

Recently, American politicians have been trying to restore production in order not to rely on other nations.

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

The Commerce Department will allocate money through the Chips for America program starting next year. Foreign companies will be eligible for these incentives as long as they increase U.S. manufacturing capacity, and TSMC has already publicly announced it will apply for CHIPS funding.

America’s largest chip maker, Intel’s largest manufacturing facility is located in Chandler, the main city of Phoenix. The company is making progress on a $20 billion expansion at its Chandler campus, which will be fully operational in 2024.

Intel also plans to build “the largest silicon manufacturing site on the planet” in Ohio with a $20 billion investment. Intel has yet to say exactly what it will build in Ohio, but production is expected to begin in 2025.

Micron, which makes memory and storage chips, said in October it would spend up to $100 billion to build a “megafab” in New York. In Texas, Samsung is investing $17 billion to expand its facilities in Austin, hoping to compete with TSMC.

During his speech, TSMC founder Chang said that he dreamed of building in America, and TSMC’s current chairman, Mark Liu, has finally made that dream come true.

“My dream of 25 years ago will be fulfilled by Mark.”

Photographer Andy Blye.