How Global Conflict Led to a Surprising Plan to Make Apple Chips in a Desert

The new wave of U.S. chip manufacturing reflects a paradoxical new reality: Geopolitics are colliding with economics, and what’s good for one is pressuring the other.

Updated October 12, 2023 / Original October 11, 2023

Your next iPhone won’t be stamped Made in America. But pry open the casing in 2025 and you may see semiconductor chips that were etched into silicon in the Arizona desert.

While it will be scorching outside, the Phoenix “fab” gearing up to produce Apple

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’s (ticker: AAPL) chips will be cool, clean, and cutting-edge. Taiwan Semiconductor Manufacturing

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0.18%

(TSM) is plowing $40 billion into the project, aiming to crank out 600,000 wafers a year.

Apple CEO Tim Cook, at a “tool in” ceremony last year, said Apple would be “proud” to be the fab’s biggest customer.

That’s no coincidence.

Apple is TSMC’s largest source of business, worth billions in annual revenue. Apple is looking for chip security, among many companies seeking to shore up supplies amid rising geopolitical tensions and fears over disruptions.

War breaking out between Israel and Hamas is just the latest worry for multinational companies. Russia’s invasion of Ukraine and escalating tensions between the U.S. and China are fragmenting global trade. Disruptions in chip supplies from the pandemic remain fresh. A global race is now on by companies and governments to secure supplies of chips that are critical to both their industrial strength and their militaries.