Yesterday’s TSMC announcement of a $100B investment in the US was notable for its lack of any specifics – including whether any of the money had been announced previously.
But a new investment note suggests that it could even represent a backwards step when it comes to making Apple chips in the US …
The story so far
Apple first announced its plan for ‘Made in America’ chips back in 2022, with the news hailed as one of the success stories of the US CHIPS Act. The initiative will see a series of TSMC chipmaking plants built in Arizona, with some of the production reserved for Apple chips for older devices.
The project has been beset with delays and uncertainties. Mass production at the first plant was due to start last year and was then pushed back to this year.
There were question marks over whether raw chips fabricated in the US would need to be shipped back to Taiwan for packaging (the name given to combining individual chips into the type of System-On-a-Chip combo used by Apple).
Further questions were raised about the promised US jobs, with many employees recruited from Taiwan, and the company even being accused of “anti-American discrimination.”
Questions remain about the $100B investment
The Trump administration announced the $100B investment ahead of TSMC’s confirmation, and is presented as if it’s new money. However, as the plan had always been for a succession of Arizona plants, it’s unclear whether some or all of the $100B was already in the budget even if not formally announced.
One element that does appear to be new is the promise of US-based chip-packaging facilities. The company had previously been expected to contract out this work to another company, Amkor. However, it may well be the case that this merely shifts the packaging work from one US facility to another.
May be a step backwards for US Apple chips
One of the biggest limitations of the deal had always been that Apple relies on TSMC’s most advanced processes, which are only available in its Taiwanese plants. The company was never going to bring its smallest processes to the US, meaning the Arizona plants could only make chips for older Apple devices. The plan was to keep the US plants a few generations behind those in Taiwan.
Apple analyst Ming-Chi Kuo suggests that the latest deal involves losing one of the most advanced plants, which would further limit the ability to make Apple chips in the US.
TSMC’s newly announced US investment plan [involves] cutting one advanced-node fab, and including an extra advanced packaging plant and R&D center.
This could mean US chips suitable even for older Apple devices will be in shorter supply.
Kuo also notes that the planned spend is “flexible.”
Though the $100 billion investment seems massive, the lack of details provides the flexibility for spending based on future conditions.
Photo by 愚木混株 cdd20 on Unsplash
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