Apple chips made in the US still require assembly in Taiwan, report suggests

Apple chief Tim Cook previously announced that the tech giant will be purchasing chips for its iPhones, Macs and other key products made in Taiwan Semiconductor Manufacturing Company’s (TSMC) new factory in Phoenix, Arizona. It seemed like a huge win for the Biden administration, which signs the CHIPS Act into law last year to boost manufacturing in the US and lessen its reliance on overseas suppliers. Now, The Information has reported that even though the components for Apple’s chips will be manufactured in the US, they’ll still have to be sent back to TSMC’s home country for assembly.

Apparently, the manufacturer’s factory in Arizona doesn’t have the facilities to package its customers’ more advanced chips. “Packaging” is what you call the final stage of fabrication, wherein the chip’s components are assembled inside a housing as close together as possible to enhance speed and power efficiency. The iPhone, in particular, has been using a packaging method developed by TSMC since 2016. Chips for iPads and Macs can be packaged outside of Taiwan, but the iPhone’s will have to be assembled in the country.

The Information says Apple is the manufacturer’s only customer using its packaging method at high volumes, but TSMC has other clients, including NVIDIA, AMD and Tesla. It’s unclear how many of those companies’ chip models will have to be sent back to Taiwan for packaging, but they reportedly include chips for artificial intelligence, including NVIDIA’s H100. The publication also previously reported that Google will be using TSMC’s advanced packaging used on the iPhone for its future Pixel phones.

The government set aside over $50 billion in funding under the CHIPS Act to provide subsidies for companies building chip factories in the US. President Joe Biden and his administration are encouraging the growth of the US semiconductor industry to mitigate fallout from the growing tension between the United States and China over Taiwan. In August, the president even signed an executive order that limits American investments in Chinese tech firms dealing with semiconductors, quantum computing and artificial intelligence.

Seeing as the government recently established (PDF) a National Advanced Packaging Manufacturing program to boost chip packaging in the US, it’s aware of the need to bring the process into the country, as well. Apple and all the aforementioned TSMC clients aren’t the only companies whose chips have to be sent overseas for assembly, since manufacturers aren’t making enough products in the US to justify building packaging facilities in the country. However, that program is only getting $2.5 billion in funding under the CHIPS Act, and the Institute of Printed Circuits told the publication that the amount shows packaging isn’t being prioritized. As for TSMC, The Information’s sources said it has no plans to build packaging facilities in the US due to the huge costs involved, and any future packaging method it develops will most likely be offered in Taiwan.