iPhone chips manufactured in the US might have to go back to Taiwan for packaging
Encouraged by the American government, Taiwan Semiconductor Manufacturing Co., or TSMC, is making its first factory in the US. Apple plans to buy chips from the Arizona factory but a new report says the chips won't entirely be made in the US.
TSMC is the biggest maker of advanced chips and Apple is its biggest customer. Since China thinks of Taiwan as a breakaway province and relations between the two are deteriorating sharply, an Arizona-based factory will help shelter American companies reliant on TSMC from the effects of any potential clash between China and Taiwan.
The plant will kick off production of chips by 2024. But things have not been going smoothly. Taiwanese and American workers are apparently not getting along well. On top of that, TSMC is faced with higher costs in the US.
And even when it's ready, the Arizona factory will reportedly not be able to produce finished chips. According to a new The Information report (via AppleInsider), the chips that will be manufactured in the US will have to be sent to Taiwan for packaging. Packaging is the final process of chip fabrication and involves putting integrated circuits in a housing.
The Arizona facility is apparently not equipped to package advanced chips, such as those used in the iPhone. TSMC doesn't have a packaging facility in the US and isn't even planning on constructing one as the cost isn't considered justifiable.
So, for now, as SemiAnalysis chief analyst Dylan Patel puts it, the Arizona factory is nothing more than a paperweight.
The TSMC Arizona fab is effectively a paperweight in any geopolitical tension or war [with China over Taiwan] due to the fact that it still requires sending the chips back to Taiwan for packaging." - Dylan Patel
So, in the beginning, TSMC Arizona will only be able to make and assemble chips for Macs and iPads. However, since Apple is an important customer and the US government is offering billions in subsidies for those offering advanced packaging facilities in the country, TSMC might eventually construct a packaging plant in the US for iPhone chips.
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