Tim Cook and President Biden came to Arizona to announce US-made chip plans

Tim Cook and President Biden came to Arizona to announce US-made chip plans

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

For factory customers, which also include AMD and NVIDIA, the new facility means more secure chip supply and faster production times. Chipmaker TSMC also said today that it will begin construction of a second factory in Phoenix next year, boosting annual production at the site.

“These chips will power iPhones and MacBooks, as Tim Cook can attest,” President Joe Biden said at an event outside the Arizona factory on Tuesday. “Apple had to buy all the advanced chips overseas. Now we’re going to do more of their supply chain here at home.

Biden and Apple CEO Tim Cook were present in North Phoenix for TSMC’s “Tool-in” ceremony, marking the arrival of production equipment at the first factory.

“A masterstroke and game-changing development for the industry”

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

TSMC is a dedicated foundry, meaning it manufactures chips designed by other companies. Apple, AMD, and NVIDIA are among its biggest customers, and even Intel relies on TSMC to make the most advanced processors.

The first Phoenix factory will manufacture 4nm processors (upgraded from the initially leaked 5nm), with production expected to begin in 2024. The second factory will come online in 2026 and produce 3nm chips, which are the smallest processors and the most complex in production today.

In total, TSMC said it would invest $40 billion in its capacity in Arizona, which is among the largest foreign direct investments ever made in US manufacturing. The two fabs will produce more than 600,000 wafers per year by 2026, which White House officials say will be enough to meet all of America’s demand for advanced chips.

Top executives from Apple, AMD and NVIDIA confirmed Tuesday that they would be among the first customers to buy chips from the new Arizona factories.

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

TSMC's first factory in Phoenix, Arizona.

The afternoon featured a slew of speakers hammering home the seriousness of TSMC’s coming to Arizona. Red-shirted TSMC employees dotted a crowd of around 200, and the speeches were so plentiful there was even an intermission with a champagne toast to break things up.

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

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

Yet by the time those Arizona factories are both up and running, TSMC will already be producing more advanced chips at facilities overseas. The company plans to produce 2nm chips by 2025, according to 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 amazing what chip technology can accomplish. And now, thanks to the hard work of so many people, these chips can be proudly stamped “Made in America”.

The United States is in the midst of a semiconductor manufacturing renaissance

The United States is in the midst of a renaissance in semiconductor manufacturing, inspired in part by the harried supply chains of the covid pandemic. The vast majority of the world’s semiconductors are produced in Asia, with the United States producing around 10% of the world’s semiconductors.

Apple has spent the past few years expanding its supply chain beyond China to avoid potential disruptions in the future. It now produces iPhones in India and is looking to expand MacBook and Apple Watch production in Vietnam. TSMC factories won’t mean large-scale iPhone production in the US, but they will supply critical components used in Apple products.

The semiconductor shortage has cost Apple some $6 billion in lost sales, and the company recently said it plans to buy more chips from Europe and the United States to counter supply issues.

Recently, US politicians have pushed to relocate manufacturing to avoid dependence on other nations.

This reshoring force culminated in the CHIPS and Science Act, a legislative package that contains $52 billion for domestic chip production. Biden signed the bill in August, but the funding has yet to disburse.

The Commerce Department will allocate the money through its “Chips for America” ​​program, starting next year. Foreign companies will be eligible for these incentives as long as they build US production capacity, and TSMC has already publicly stated that it will apply for CHIPS funding.

Biden came to Phoenix to tout American manufacturing and the CHIPS and Science Act.

Even without CHIPS funding, several large semiconductor projects are underway.

Intel, America’s largest chipmaker, has its largest manufacturing site in Chandler, a large suburb of Phoenix. The company is moving forward 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, starting with a $20 billion investment. Intel has yet to reveal 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 in hopes of competing with TSMC.

Chang, the founder of TSMC, said during his remarks that he had long dreamed of building in America and that current TSMC President Mark Liu is finally bringing that dream to life.

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

Photography by Andy Blye.

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