Apple to Buy Over 100M US-Made Chips from TSMC Arizona
Apple plans to purchase "well over 100 million" chips from TSMC's new Arizona facility this year, a move that contributed to TSMC's stock trading near a record high. The purchase is part of a broader strategy to increase U.S.-based manufacturing and reduce tariff risks. Despite this diversification, TSMC also plans to build 10 additional fabs in Taiwan to meet surging AI-driven demand.
- The total investment in TSMC's Arizona project has grown to over $65 billion, making it the largest foreign direct investment in a greenfield project in U.S. history. This investment is supported by up to $6.6 billion in direct funding and up to $5 billion in loans from the CHIPS and Science Act. - The first fab began high-volume production on its 4-nanometer process technology in late 2024. The second fab is slated for 3nm production, now targeting the second half of 2027, an acceleration from the original 2028 timeline. A planned third fab will introduce 2nm process technology to the U.S. by the end of the decade. - In addition to Apple, other major U.S. customers like AMD and NVIDIA are expected to source chips from the Arizona facilities. AMD is anticipated to be the second-largest client after Apple, likely for its high-performance computing and AI processors. - The project has faced significant challenges, including a shortage of skilled workers, complex U.S. permitting processes that take twice as long as in Taiwan, and higher operational costs. TSMC founder Morris Chang noted that chips produced in the U.S. could cost 50% more than those made in Taiwan. - The Arizona site is part of a larger strategic plan to create a "megafab cluster." TSMC's long-term vision for the Phoenix location includes a total of six fabrication plants, two advanced packaging facilities, and an R&D center. - The Arizona facility reported a loss of nearly $441 million in 2024, highlighting the financial challenges of establishing a new, complex manufacturing ecosystem. These difficulties are compounded by supply chain gaps, requiring the import of key materials like sulfuric acid from Taiwan.
