TSMC's Arizona chip plant nears Apple approval, but will never rival Taiwan

After four years of planning, TSMC is now finally going to make older iPhone processors in the US, but it's not and never will be a true return to American manufacturing.

It was back in 2020 when pressure over taxes made firms look again at manufacturing in the US, and TSMC announced it would build a processor plant in Arizona. By 2022, that expanded to plans for a second plant — and Tim Cook pledged that Apple would use processors made in Arizona.

Now after reportedly starting its first production run in September 2024, TSMC USA is about to reach a key milestone. According to Nikkei Asia, Apple is now in the process of officially certifying and verifying the processors.

Once this quality assurance stage is met, TSMC Arizona is expected to deliver mass-produced processors shortly. They may even begin shipping in Apple devices as soon as the current quarter.

Just not flagship devices now, and likely not ever.

New American jobs

Politically, it's all a victory for the US which can say that it has successfully brought manufacturing back into the country after decades of it being done overseas. Then, too, there is the issue of TSMC bringing new jobs to the States — though not as many as thought, since the company doesn't seem to value American workers.

There's also the issue of allegedly unsafe working conditions for construction workers during the build. Reportedly, there have also been fatalities on site.

Those conditions may yet continue as TSMC builds its second plant, too. For now, though, the first plant is operational, it's going to provide A-series processors, and so it's all got to be good news.

A political step, but mostly pointless

Asked in 2018 about US manufacturing of Apple's products, Tim Cook talked up how much it was already doing. At that stage, iPhone display glass was being made in Kentucky, and Face ID for the then-new iPhone X was to be made in Texas.

"We know that Apple could only have been created in the United States," Cook said. "We love this country. We're patriots. This is our country. [We want] to create as many jobs in the US as we can."

Flash forward to today, and thanks to a $6.6 billion subsidy under the Chips Act, Apple processor manufacturing is starting up in the US. This subsidy is likely the only reason that TSMC is in Arizona.

It's just always going to be behind TSMC's operations in Taiwan. At present, it's likely that each processor made in Arizona, will have to be shipped to Taiwan and China for packaging, the last stages of production.

That will change as Apple has announced that it will package the TSMC Arizona processors at a nearby plant in Peoria. But that packaging is to be done in a purpose-built Amkor plant, which will not be ready until 2027.

There was a joke in the UK in the 1980s where it was said that the only thing actually manufactured in the country were little signs that said "Made in UK." The work in Arizona is vastly more significant than that, and it is genuine manufacturing, which is good.

What it does not do, is change Apple's need for most of its manufacturing to be done outside of the US.

Then at present, the Arizona is chiefly producing the A16 processor. That was used in the iPhone 14 Pro, but now is limited to the iPhone 15, and iPhone 15 Plus.

Most recently, it's been reported that this first plant is also making the Apple Watch SiP (System in Package), so it is presumably capable of being used to make different processors. Whether it will or not is a different story.

The second plant, now expected in 2028, had better be able to since Apple will not be selling any A16-based iPhones by then.

Problems manufacturing in the US

Apple has been trying to manufacture in the US since long before the current US/China trade tensions. In 2012, it announced that the cylindrical Mac Pro would be built in the States, for instance.

At the same time, some iMacs were shipping with labels saying they had been "Assembled in USA."

But America no longer has the kind of manufacturing base that's needed for complex projects. That 2021 Mac Pro build was held up, for instance, by the difficulty in sourcing a particular custom screw that was simple to buy in China.

When Apple came to redesign the Mac Pro in 2019, it moved manufacturing back to China — for a time. That was reported in June of 2019, and by November of the same year, Tim Cook was showing then-president Trump how the Mac Pro was being made in Texas.

It's not clear how many of the Mac Pro were made in the US, just as it's not known how many processors will be made at TSMC's new plant in Arizona.

What is clear and what is known is that even once Apple can package processors in Arizona, it will still have to ship the chips to other countries for the rest of manufacturing of its devices.

It would be unfair to describe the Arizona chip plant as solely a public relations job or just a money grab by TSMC — but it isn't in any way hugely significant.