When the chips are down
When running for office in early 2016, Donald Trump vowed to “get Apple to build their damn computers and things in this country instead of other countries.” This vague, half-formed plan was widely ridiculed because it seemed so impractical: You can’t just tear up a complex overseas supply chain and start from scratch in a territory with almost none of the required skills and infrastructure. But publicly at least, Apple gave the idea a polite reception.
Perhaps looking for patriotic cover against accusations of leftwing bias the biggest company in the world can’t afford to alienate half of its home market Apple is quite keen on the idea of building some hardware in the U.S. Despite Trump’s comments, the company was already making one of its “damn computers” on U.S. soil: the Mac Pro, proudly manufactured at a factory in Austin, Texas. But it’s important to stress that the Mac Pro is a niche product made in small numbers, and therefore orders of magnitude easier to build at home than the iPhone, for example.
Similarly limited in scope is this week’s announcement that supplier TSMC (which is based in Taiwan) will make Apple chips at a plant in Arizona. Again, we’re not talking about the manufacture of actual Apple products, but merely one component. But it’s something. TSMC makes chips for iPhones, iPads, Macs, Apple Watches, Apple TVs and, well, pretty much everything Apple sells, so the company could start declaring that some of these devices are “(Partly) Made in America.”
Not yet, though. Because the first caveat to this positive-sounding story is the timeframe. The plant doesn’t open until 2024, which obviously rules out the initial runs of the iPhone 15, the Apple Watch Series 9, and the next generation of Macs and iPads. TSMC and Apple rushed to get the news out there, but the effects of the move are still a fair way off.
Even when the plant is running, it won’t be making all of the chips that Apple uses; it simply won’t have the capacity. Nor will it be set up for the 3nm manufacturing process which the company is expected to switch to in 2023. Working at either 5nm or 4nm, the plant will have to focus, at least initially, on legacy chips that aren’t nearly as important as a new A-series CPU. If you end up buying an iPhone 13 or 14 in 2024, you might find that its processor was built in Arizona, but that’s unlikely to apply to an iPhone 15 or 16. And it’s more likely the plant will be making lesser chips for a small number of Apple Watches and Apple TVs.
Ultimately the problem with Apple’s “Made in America” plans is that the company isn’t really motivated to bring its manufacturing home, and won’t benefit in any practical sense from doing so. Doing most of the manufacturing in China, Vietnam, and India makes sense because labor is cheaper in those countries, labor laws tend to be less favorable to workers, and existing factories are set up to make tech products at scale. Apple hasn’t set up a complex international supply chain for the fun of it; rather, each link in the chain is the optimal choice for legal, economic, talent, or tax reasons. Moving any part of it to the U.S. will mean higher costs and lower profits–and likely higher prices for consumers. What Apple really wants is good PR about creating jobs and making chips in the U.S. The Arizona plant has achieved those headlines already and should deliver the jobs. But if people reading those stories think the iPhone 15 will be powered by a chip made in the U.S., they’re sadly mistaken.
Of course, the Arizona plant may be the start of a massive shift. It’s possible that financial incentives promised by successive administrations (including the CHIPS Act signed into law in August) will mean it makes sense for Apple to pull significant swathes of its supply chain back into the U.S. But this will happen if and when it benefits Apple, and not a moment sooner.