Published - November 7, 2022 @ 11:28 AM (EET)

‍

Chief Executive Tim Cook of Apple Inc. (NASDAQ:AAPL) said Tuesday that the company would build chips again in the US after a nearly decade-long hiatus, a critical step in reducing its reliance on Asia-based manufacturing.

Cook, alongside President Joe Biden, spoke at an event in Arizona and revealed that Apple would expand its partnership with TSMC (Taiwan Semiconductor Manufacturing Company Ltd), which already produces chips for the iPhone maker. 

According to video footage from the event, Cook said Apple would buy processors made at a new Arizona factory.

Cook said, "And now, thanks to the hard work of so many people, these chips can be proudly stamped Made In America."  He added, "This is an incredibly significant moment." 

Only small quantities of chips will initially be built for Apple and may use technology inferior to what the company will need for its flagship devices in 2024.

WHY IT MATTERS

The shift of Apple's production out of China comes after recent unrest at the Zhengzhou production facility in China and the rigid lockdowns in the country due to rising COVID-19 cases.

After the pandemic caused supply chain problems that led to chip shortages for vehicles and many other items, Biden has sought to boost semiconduction production.

Down from 37% twenty years ago, semiconductor production in the US accounts for only 12% of the global total.

Elsewhere, the Taiwanese company (NYSE:TSM) said it would build a second semiconductor factory in Arizona, tripling its initial investment to $40 billion. The world's largest contract chip maker expects annual revenue to reach $10 billion from the Arizona chip plants.

‍

Major TSMC customers, including Apple, Nvidia Corp. (NASDAQ:NVDA), and Advanced Micro Devices (NASDAQ:AMD), said they expect the new plants to produce their chips.

Although TSMC's planned investment at its new Arizona plant raised concern among Taiwanese, whose economy relies heavily on semiconductor manufacturing, economy minister Wang Mei-Hua, said Wednesday the island remains TSMC's most important production base.

‍

‍