Apple’s plan to purchase chips for its iPhones, Macs, and other products from Taiwan Semiconductor Manufacturing Company’s (TSMC) new factory in Arizona has hit a roadblock. Despite the chips being manufactured in the US, they will need to be sent back to Taiwan for assembly due to the lack of packaging facilities in TSMC’s Arizona factory.
Packaging is the final stage of chip fabrication, where the chip’s components are assembled inside a housing to optimize speed and power efficiency. Apple has been using TSMC’s packaging method for its iPhone chips since 2016, and this method is exclusive to Apple at high volumes. While chips for iPads and Macs can be packaged outside Taiwan, the iPhone chips will need to be assembled in Taiwan.
This development highlights the challenges of bringing semiconductor manufacturing and packaging entirely to the US. Despite efforts by the US government, including the CHIPS Act, which provides subsidies for chip factories, packaging facilities are still lacking in the country. Apple is not the only company affected by this limitation; other TSMC clients, including NVIDIA, AMD, and Tesla, may also need to send their chips to Taiwan for packaging. This situation could have broader implications for the tech industry’s efforts to reduce its reliance on overseas suppliers and improve supply chain resilience.
The US government has been actively promoting the growth of the semiconductor industry in the country, recognizing the importance of domestic chip production amid geopolitical tensions. While the government has allocated funding for chip manufacturing under the CHIPS Act, packaging facilities have received comparatively less investment. Building advanced packaging facilities is a costly endeavor, and TSMC currently has no plans to establish such facilities in the US. As a result, it is likely that packaging for advanced chips will continue to take place in Taiwan, highlighting the complexities of reshoring semiconductor production entirely.
