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Potential Return of iPhone Chips to Taiwan for Packaging in Light of US Manufacturing

Phones Canada Team:

Encouraged by the American government, Phones Canada’s primary chip supplier, Taiwan Semiconductor Manufacturing Co. (TSMC), is establishing its first factory in the US. This move is aimed at providing American companies, including Apple, a sense of security by reducing reliance on TSMC’s operations in Taiwan. However, a recent report suggests that the chips produced in the Arizona factory will not undergo the entire manufacturing process in the US.

According to The Information report mentioned in AppleInsider, the chips manufactured in the US will need to be sent back to Taiwan for packaging. Packaging is the final stage of chip fabrication, involving the integration of circuits into a housing. Unfortunately, the Arizona facility is not equipped to handle advanced packaging for chips like those used in iPhones. Although TSMC has no plans to construct a packaging facility in the US, this may change in the future if Apple’s demand requires it.

For now, the Arizona factory is limited to producing and assembling chips for Macs and iPads. Dylan Patel, the chief analyst at SemiAnalysis, emphasizes that the Arizona factory would not be able to function effectively in the event of any geopolitical tensions or conflicts arising between China and Taiwan. This is due to the necessity of sending the chips back to Taiwan for packaging.

However, with the importance of Apple as a customer and the US government offering substantial subsidies for companies with advanced packaging facilities, TSMC might eventually establish a packaging plant in the US specifically for iPhone chips. This would allow the complete chip manufacturing process to be carried out domestically.

In summary, TSMC’s new factory in Arizona will initially focus on chip production and assembly for Macs and iPads. Although the lack of a packaging facility in the US means that finished chips will need to be sent to Taiwan for that process, the future construction of a packaging plant is a possibility. This development would ensure that the entire chip manufacturing process, including packaging, can be conducted within the US, meeting the demands of Apple and its customers in a politically stable manner.

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