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Bloomberg: To Improve Chip Supply Security, Apple needs to look at TSMC's Fabs outside the U.S.

1 x cover TSMC Arizona plant

The greatest strength of Apple's CEO, Tim Cook, is his masterful understanding of Apple's supply chain that he created under his former boss, the late Steve Jobs. If anyone could see where the industry supply chain is headed, it's Tim Cook. He practices what Wayne Gretzky used to say: “Skate to where the puck is going, not where it has been." And while Apple fans and investors are confident that Cook will guide Apple through a coming chip crunch, Bloomberg Industry Research provides a peek at the issues that may come Apple's way, even if Apple doesn't need their advise.

A new United Daily News report out of Taiwan reports that Bloomberg Industry Research analysis has pointed out that even if Apple will become the largest customer of TSMC's Arizona fab in the United States, it will still need to find alternative sources of supply, be it Intel or Samsung, in order to reduce the risk of semiconductor supply in the medium term. Suppliers of most of Apple's chips (not just Bionic processors) may be overly dependent on Taiwanese manufacturing.

In the next three years, Apple's demand for advanced process capacity will increase significantly. This poses a challenge for Apple to reduce its dependence on Taiwan for the production of bionic processors.

While Apple will be using TSMC's N3 (3nm) process this year and adopt the N2 (2nm) process in 2025, the yield rate of the latest chip production technology may be lower than that of mature process technologies such as N7 and N5, resulting in a decline in 12-inch wafer production.

Bloomberg Industry Research predicts that Apple's total wafer demand for iPhone chips will increase by 43% by the end of 2025, from about 560,000 in 2022 to nearly 800,000 in 2025.

Due to Apple's dependence on TSMC's Taiwan-based fab to produce top-end iPhone chips and desktop computer processors, Apple faces a large supply chain risk, and it will not be able to effectively resolve this risk in the next three to five years.

Although Apple is expected to become the number one customer of TSMC's future Arizona fab, this doesn't effectively solve the problem of chip supply dependence on a single region.

The first phase of TSMC's Arizona fab is expected to start producing 5nm process chips in 2024. However, according to the scenario analysis of Bloomberg Industry Research, in 2025, Apple may only be able to obtain 120,000 wafer production capacity of the fab, which can only meet 15% of the demand. Relevant reasons include chip design companies such as Qualcomm and Nvidia (Nvidia) splitting part of their production capacity, and new fabs generally have a commissioning period of 12-24 months after they are put into production.

One thing Apple must also keep in mind is that the number of chip suppliers that rely on Taiwanese factories is rapidly increasing. This is crucial for Apple to build a more complete and resilient semiconductor supply chain.

As noted at the top of our report, Tim Cook's command of their supply chain will ensure that the company has several plans on the table to navigate their requirements well into the future. Yet the report by Bloomberg Industry Research at least provides us with an overview of the coming chip crunch that Apple and other industry players could be facing in the coming years. 

10.0F0  Supply Chain News & Rumors


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