Apple supports TSMC to build a factory in the United States to install “American cores”. | blog post
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Apple has once again announced its intention to seek a decentralized supply chain in order to reduce its reliance on Asia for chip procurement. TSMC founder Zhang Zhongmou confirmed that TSMC will set up the most advanced 3nm fab in the US. However, some analysts believe that if Apple abandons the existing industrial chain with supporting systems, high efficiency and low cost, and violates the law of resource allocation, Apple may lose its market advantage and encounter the “thin” reality.
TSMC.
In order to solve the dilemma that about 60% of US chip products are imported from other countries and regions, Apple will cooperate with TSMC, the world’s largest chip foundry, to let the latter produce chips on its for in the United States.
A few days ago, Apple CEO Cook said in an internal meeting that Apple plans to buy from a chip factory being built in Arizona, USA, which marks an important step for Apple to reduce its dependence on Asia in chips. Bloomberg believes Cook could be referring to the Arizona plant of his exclusive chip manufacturing partner TSMC.
The theme of the cover story of the latest issue of Taiwan’s “Business Weekly” is that the first batch of TSMC employees moved to Phoenix, USA with their families. Taiwan’s “United Daily News” said the Arizona plant is the largest overseas investment project planned by TSMC in recent years, with an investment of more than 12 billion US dollars. It is also the first chip factory to break into the advanced 5nm process, and has been highly appreciated by the United States.
Bloomberg also reported that the United States, once the hegemon of global chip manufacturing, has ceded the dominance of this industry to Taiwanese companies, which already occupy more than 90% of the world’s advanced process chip production capacity.
Zhang Zhongmou (center) attended the relevant APEC meeting in Bangkok and admitted that the cost of production in the United States is at least 50% higher than in Taiwan. AP photos
Zhang Zhongmou, the founder of TSMC who attended the APEC-related meeting in Bangkok, said on the 19th that he clearly knew that the cost of production in the United States was at least 50% higher than that in Taiwan, but this was not excluding the use of some of the products that the United States needs most and that are more advanced than other companies. Production capacity” moved to the United States.
Zhang Zhongmou said in an interview on Monday (21st) that the current 5nm plant in Arizona is the most advanced process in the United States, but TSMC’s most advanced process has reached 3nm. He himself confirmed that TSMC will set up the most advanced 3nm fab in the US.
In addition to the United States, Europe is also an option for Apple to diversify the risk of the chip supply chain. According to reports, Cook suggested in a recent visit that the European continent will be another source of chips. In Europe, TSMC is also negotiating with the German government and may set up a factory in Germany.
Apple started manufacturing the latest iPhone 14 in India in September this year. AP photos
In addition to chips, Bloomberg also revealed that Pegatron, a Taiwanese electronics foundry, has started assembling Apple’s latest mobile phone, the iPhone 14, in India, becoming the second Apple supplier to produce the iPhone 14 in India after Foxconn. Reuters reported that at least three of Apple’s global suppliers currently assemble iPhones in India, including Foxconn, Pegatron and Wistron. Foxconn plans to increase the number of workers at its iPhone factory in India by 53,000 within two years, bringing the number of workers at its southern factory to 70,000, government officials familiar with the matter said.
According to US media reports, in Apple’s 2017 major supplier list, only 18 are located in India and Vietnam, and last year it increased to 37. Previously, Apple would only produce older iPhones in India , but began production of the latest iPhone 14 in September this year. Apple is rumored to start producing MacBook notebooks in Vietnam soon.
In fact, Apple has been restructuring the global supply chain since 2018, but this plan has been slowed down by the impact of the new crown pneumonia epidemic. During this period, Apple’s supply chain became more dependent on China.
More than 85% of the production capacity of the iPhone 14 Pro is in Zhengzhou.
Taiwanese media recently quoted Yang Yingchao, chairman of Kirkland Capital who is nicknamed “the analyst who knows Hon Hai best”, as saying that Apple’s supply chain cannot be completely withdrawn from mainland China. According to Taiwanese media reports, 150 of Apple’s biggest suppliers have set up factories in mainland China. Currently, 80% of the production capacity of Apple products still comes from mainland China, for example, Zhengzhou Foxconn Industrial Park is responsible for about 80% of the production capacity of the iPhone 14 series, and more than 85% of the production capacity of the iPhone 14 Pro in Zhengzhou.
Since 2020, TSMC’s going to the United States to set up a factory has continued to raise concerns on the island. Zhang Zhongmou said in a speech at the Brookings Institution, an American think tank, that the expansion of the US chip manufacturing industry does not have enough talent to support it. At the same time, the cost of manufacturing in the US is too high .o. When Liu Deyin, the current chairman of TSMC, said that he would further build a 3nm factory in the United States, Zhang Zhongmou bluntly said, “If there are too many factories in the United States, TSMC will lose.”
Some analysts believe that due to the gap in “supporting industries, infrastructure and worker qualifications”, India and Vietnam cannot replace China’s role in Apple’s supply chain. At the same time, compared to the United States, Japan, and South Korea, China maintains advantages in terms of labor costs, logistics speed, and government support policies.
Xiang Ligang, chairman of the Information Use Alliance, pointed out that Apple’s supply chain has always been highly concentrated in Northeast Asia due to its strong industrial support capabilities, high production efficiency, and low cost. Now, Apple wants to break the industrial chain formed under the optimal allocation of global resources, which violates economic laws to some extent. Xiang Ligang believes that the pursuit of a larger scale industrial setting around the world is a manifestation of the spillover effect of the industrial chain. However, behind Apple’s current decentralization of the industrial chain, there are deep geopolitical considerations.
He believes that if Apple insists on breaking the existing industrial chain and tries to restructure, it will encounter the risk of high costs and reduced efficiency. Taking Foxconn’s slow progress in building a factory in the United States as a precedent, the possibility of the semiconductor industry restructuring the industrial chain in the United States is very uncertain.
He said: “The supply chain must be highly concentrated in areas with a complete production system, so that the advantages of high efficiency and low cost production can be brought in. If this law of resource allocation is broken, it will the market advantage will undoubtedly be lost.”
In short, when chip companies set up factories in the United States, they will first face the problem of a significant increase in labor costs; in addition, the local corporate culture and the trade union system will also limit the flexibility of production efficiency, so that they cannot adapt to the ever-changing needs of the market; moreover, Chinese companies occupy an important position in Apple’s supply chain. If Apple builds a new supply chain in India or Vietnam, a large number of supporting enterprises must be built at the same time to show efficiency and cost advantages. Otherwise, it will the assembly in India, and it will be necessary to import a large number of parts from China. Imports and fragmentation of the industrial chain will become empty talk.
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