US and European officials talk incessantly about making more of the world’s advanced computer chips somewhere other than Taiwan, which they see as vulnerable to Chinese invasion or influence. They are on a mission to make more chips in the US and Europe and want to spend taxpayers’ money to do so.
Apple doesn’t seem so concerned. In the coming years, Apple has planned that devices that roll off the assembly line will continue to rely on chips largely made in Taiwan.
Apple has a track record of controlling global technology production, and the company has lobbied to make more computer chips in America. But Apple and other major chip buyers don’t seem to have made it a priority and aren’t seriously using their influence over suppliers to accelerate the construction of chip factories in the US, Japan or Europe.
“The industry isn’t calling this something they should take immediate action on,” said Brett Simpson, computer chip specialist and partner at investment firm Arete Research.
The apparent division between Western governments and the biggest buyers of chips, such as Apple, raises a question for businesses and policymakers alike: who is right about the urgency of the economic and geopolitical risks of concentrating chip production in Taiwan — the people who need votes or the companies that vote with their wallets?
Government officials may be overestimating the risks of concentrating chip production in Taiwan, or chip buyers like Apple may be underestimating them. Or perhaps these companies find it too discouraging to part with the expertise of Taiwanese chip factories more quickly. Whatever the reason, it’s as if elected leaders and the companies that need chips most are operating from a different sense of what’s possible and necessary for the future of this vital industry.
Let me summarize why big corporations and big governments want to keep computer chips flowing, but are not aligned on how and how quickly to achieve that.
Many important products, including smartphones, medical devices and fighter jets, require computer chips to function as brains or memory. Some of us have become acutely aware of these tiny components because computer chip production has not kept up with the demand from people who wanted to buy cars, computers and other goods during the pandemic.
Shortages of some products and rising tensions between the US and China have turned the spotlight on Taiwan Semiconductor Manufacturing Company, or TSMC. It makes most of the world’s advanced computer chips, including for Apple’s products, almost entirely in factories in Taiwan.
TSMC is expanding to other places, including Arizona, but it will take years to get new plants up and running. It is in everyone’s interest that factories produce computer chips without interruption, otherwise the global economy will sputter. The Biden administration and many tech experts also say it is strategically important to preserve US chip manufacturing know-how and counter China’s chip manufacturing ambitions and other key technical areas.
It won’t be easy to change the world’s reliance on chips made in Taiwan, and industry officials told me Apple has been working behind the scenes on legislation to produce more chips in America.
Some major chip buyers have also said they will help TSMC pay for its chip factories outside of Taiwan and will buy chips produced there. The question is whether this could all go faster if influential customers flexed more of their muscles.
Simpson told me that if Apple and other big customers like Qualcomm and Nvidia wanted to get production out of Taiwan more quickly, they could push TSMC to get new factories done all at once rather than in phases, as TSMC has done. They could also commit to buy more chips from other manufacturers such as Samsung and Intel with factories outside of Taiwan. Instead, Apple and others have mostly doubled contracts with TSMC.
If Washington and Silicon Valley don’t seem to share the same sense of urgency, it’s hard for all of us to know if it’s worth the collective effort to create a new world order in computer chips.
