Too Close to China, Apple Plans to Move Factories

Apple is reportedly beginning to explore cooperation with Intel and Samsung to produce the main chips for iPhone and MacBook in the United States.

This step is taken as an effort to diversify suppliers amid concerns over global supply chain disruptions and dependence on Taiwan Semiconductor Manufacturing (TSMC).

According to a Bloomberg report, Apple has held initial talks with Intel regarding the possibility of using the company’s chip manufacturing services.

Additionally, several Apple executives are said to have visited Samsung’s factory under construction in Texas, US, which will later produce advanced chips.

However, to date, there has been no contract or official order from Apple to either company. Sources familiar with the discussions state that the entire process is still in the early exploration stage.

Apple is also said to still have concerns about the technological capabilities of chip manufacturing beyond those of TSMC. Therefore, there is no certainty whether Tim Cook’s company will truly partner with new suppliers.

Spokespeople for Apple, Intel, Samsung, and TSMC declined to comment on the report.

News of Apple’s approach to Intel immediately triggered a surge in the US chipmaker’s shares. Intel’s shares jumped up to 12% and hit a new all-time high in New York trading on Tuesday local time. Overall, Intel’s shares have surged more than 180% this year.

For more than a decade, Apple has relied on TSMC to produce its main chips, known as system-on-a-chip (SoC), for iPhone, iPad, and Mac. Apple’s latest chips are currently produced using TSMC’s 3-nanometre fabrication technology in Taiwan.

Although it is one of the world’s largest semiconductor buyers, Apple is not immune to global supply chain pressures. The surge in AI data centre construction and high demand for Mac computers capable of running AI models locally have triggered shortages of advanced chips.

In last week’s quarterly earnings report, Apple CEO Tim Cook acknowledged that chip supply limitations are beginning to hinder the company’s growth.

“We have lower supply chain flexibility than usual,” Cook said.

However, finding alternative suppliers is no easy task. Intel and Samsung are considered not yet able to offer production capacity and technological consistency on par with TSMC, which currently dominates the global contract chip manufacturing industry.

For Intel, securing Apple as a customer would be a major victory in the company’s revival strategy under CEO Lip-Bu Tan.

Intel itself is currently working to expand its chip manufacturing or foundry business after several failures to attract major customers.

Meanwhile, Samsung is more experienced in the foundry business than Intel, but the South Korean company still lags far behind TSMC in market dominance.

Interestingly, Apple and Samsung have been fierce competitors in the global smartphone market. However, Apple is said to view Samsung as one of the realistic options to strengthen its chip supply chain.

Apple itself has a long history with Intel and Samsung. Intel was once a Mac processor supplier from 2006 until around 2020 before Apple switched to its own chips based on iPad architecture. On the other hand, Samsung was also once an iPhone chip manufacturing partner more than a decade ago.