Apple to buy U.S.-made chips from TSMC in supply chain pivot

Yahoo Finance’s Daniel Howley joins the Live show to discuss reports that Apple will buy U.S.-made chips from Taiwan Semiconductor.

Video transcript

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JULIE HYMAN: Apple is planning to source some chips from the still unfinished Taiwan Semiconductor plant in Arizona. That's in an effort to diversify its supply chain and pivot from Asia. This is according to a report from Bloomberg.

And for more on this, let's bring in Yahoo! Finance's tech editor Dan Howley. And you know, Dan, there's been so much attention on chips and the buildout of the chip manufacturing business in the US. We already knew that Apple is sort of going in this direction but this is an interesting development.

DAN HOWLEY: Yeah, it really is. This could be for the iPhone. This could be for the Mac. Really the big deal is it's TSMC. They-- this is likely the plant that they're talking about building out in Arizona that would go up and running in 2024. So not quite tomorrow but, you know, a little bit down the line.

And I think for Apple, it just speaks to the broader problems that they've had with China in the past year. And also just looking to the future saying, you know, look, countries are talking about trying to diversify. More companies are jumping in, saying, look, we don't want to just rely on one area. We've seen the downside of that, just sourcing all of our product from China or, you know, from Taiwan with, you know, kind of the saber rattling back and forth with China and the US over Taiwan.

So it, you know, kind of behooves a company like Apple to say, look, we're going to start moving our productivity capabilities or our supply chain, away from those areas. And we've seen them talk about moving to India, to Vietnam, moving out of China. More-- don't get me wrong, it's not happening tomorrow. It's going to take quite a while for them to move a lot of their capacity or at least start having more available on a global scale.

But this is really a big move for them. And frankly, for the chip manufacturing capabilities in the US, this is Apple we're talking about. They sell millions of iPhones, you know, millions of watches, millions of AirPods and laptops. And you know, all of those need chips. And TSMC makes those chips.

BRAD SMITH: So the timing around this sounds like 2024 for end users of the Apple products of the Apple ecosystem. You know, what would that difference look like and how soon thereafter?

DAN HOWLEY: It would prob-- honestly, you know, a chip, an advanced chip can take six months to be built, you know, like from start to finish. It can take quite a while. And you know, there's no guarantee that this is gonna be the most advanced chips that Apple needs.

So I think, you know, you could say, maybe just conservatively, a year. You know, that they would go from start to into end user products. It doesn't take that long to make an iPhone.

BRIAN SOZZI: Dan, why is Intel not getting any business here?

DAN HOWLEY: It's interesting. I mean, you know, Apple and Intel don't have the best relationship, obviously. Apple kind of kicked them to the curb, as the kids say. And you know, I think that might be part of it.

But they are trying to build up their own fab [? four-- ?] third-party companies. So they might be part of this in the long run. But at this point, Apple has worked with TSMC. They know what Apple wants, right?

So it's that quality control I think that really is part of it. Apple is crazy about that. And so the fact that they have TSMC already and this could be a TSMC-- building that plant, this could be the illusion that Tim Cook was making to that plant. It just makes more sense, I think, for them to stick with them instead of going with Intel in a completely different country and for a new product that would be going into potentially an iPhone.

BRIAN SOZZI: Yahoo! Finance's Dan Howley, thanks so much. Appreciate it.