The dream of a fully domestic tech supply chain remains largely unrealized, despite increasing investment and political pressure. While some progress is being made in chip manufacturing, the vast majority of the components that make up our smartphones, computers, and other devices continue to be produced overseas. This reliance creates vulnerabilities, as highlighted by geopolitical tensions and recent supply chain disruptions.
Currently, Apple’s A- and M-series chips, the brains behind iPhones, iPads, and Mac computers, are predominantly manufactured by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan. Though TSMC has begun production at its new facility in Arizona, its capacity is currently limited to older chip designs – specifically the 4nm process – capable of producing chips like the Apple A16 (found in lower-end iPads) and the S10 used in Apple Watches. The most advanced chips, demanding the latest fabrication technologies, still originate from TSMC’s Taiwanese facilities.
The push for greater domestic production isn’t limited to Apple. Intel, spurred by multiple sources of external investment, is building new factories in Ohio and other locations. Memory manufacturer Micron is also investing in domestic facilities, fueled by profits from the growing demand for AI-related technologies. These developments signal a broader trend toward reshoring critical manufacturing capabilities.
However, the complexity of the supply chain extends far beyond chip fabrication. Manufacturing of memory, storage, and displays remains overwhelmingly concentrated overseas. Even assembling these components into finished products largely occurs outside the United States. This broader ecosystem presents a significant challenge to achieving true supply chain independence.
Apple’s Foundry Strategy: A Gradual Shift
Apple’s 2019 announcement regarding Mac Pro manufacturing in the US was initially seen as a potential turning point. However, the Mac Pro represents a relatively small portion of Apple’s overall product volume. The Mac mini, a more popular product, doesn’t carry the same symbolic weight. A significant shift towards domestic manufacturing would require bringing production of high-volume products like iPhones, iPads, and MacBooks back to the US.
Recent reports suggest Apple is exploring partnerships to diversify its chip manufacturing beyond TSMC. Apple and Nvidia are reportedly considering Intel for chip production as early as 2028, driven by geopolitical concerns, potential tariffs, and capacity constraints. This potential move isn’t about replacing TSMC for Apple’s most cutting-edge chips immediately, but rather about outsourcing production of some non-core products. The focus appears to be on mitigating risk and securing alternative sources of supply.
there’s ongoing discussion about a potential deal between Apple and Intel Foundry Services (IFS) to manufacture Apple’s M-series chips. This collaboration, if realized – projected to commence as early as mid-2027 – would be a significant validation of Intel’s foundry strategy and its roadmap to regain process leadership with technologies like the 18A node. The technical foundation of this potential deal rests on Intel’s 18A-P process, an optimized version of its 2nm-class technology.
The Challenges of Reshoring
While the desire to bring more chip manufacturing to the US is strong, significant hurdles remain. Intel, for example, needs to demonstrate consistent profitability for its foundry division to attract and retain customers like Apple. Maintaining Apple’s stringent standards for performance and power efficiency is another critical challenge. Apple demands the very best, and Intel must prove it can deliver.
The economics of leading-edge chip manufacturing have also shifted in recent years, creating a complex landscape. As detailed in a report by American Affairs Journal, Intel previously decided against pursuing low-power chip development for iPhones, deeming the market too small compared to personal computers. This illustrates the challenges of adapting to new market demands and the risks associated with investing in unfamiliar technologies.
The situation highlights a fundamental issue: the US lost its dominance in leading-edge chip manufacturing not simply due to a lack of investment, but because of a qualitative shift in the economics of the industry. TSMC pioneered the “foundry” model – separating chip design from fabrication – and achieved significant economies of scale. Replicating that success in the US requires not only financial investment but also a fundamental restructuring of the industry.
The Role of Government Incentives
Government support and incentives are playing an increasingly important role in attracting chip manufacturing to the US. The “Made in USA” agenda is a significant long-term factor, influencing policy decisions and funding allocations. Intel has benefited from substantial investment, and further incentives are likely to be crucial in attracting other companies and fostering a more robust domestic supply chain.
However, incentives alone are not enough. The US must also address the broader challenges of workforce development, infrastructure, and regulatory streamlining to create a competitive environment for chip manufacturing. The goal isn’t simply to replicate the existing global supply chain within US borders, but to build a more resilient, innovative, and secure ecosystem.
The path towards a more secure and independent tech supply chain is long, and complex. While recent developments offer a glimmer of hope, significant challenges remain. The success of these efforts will depend on continued investment, strategic partnerships, and a commitment to long-term innovation.
