Apple Holds Talks with Intel and Samsung to Build Main Device Chips in the US

Key facts

• Apple executives visited a Samsung plant under development in Texas.
• Apple held preliminary talks with Intel about chipmaking services.
• Discussions are at early stages; no orders have been placed.
• Apple warned of chip supply constraints in its last quarterly report.
• iPhone sales were held back by shortages of advanced processor chips.
• iPhone 17-family chips use TSMC technology similar to AI chips.
• Apple is concerned about reliability and scale of non-TSMC chips.
• Intel's stock has surged, making it worth more than Oracle.

Apple Seeks Chip Independence Beyond TSMC

Apple Inc. has held exploratory discussions with Intel Corp. and Samsung Electronics Co. about producing the main processors for its devices in the United States, according to people familiar with the matter. The move signals a strategic push to reduce reliance on Taiwan Semiconductor Manufacturing Co. (TSMC), its longtime chip partner, amid geopolitical tensions and persistent supply constraints. Executives from Apple have visited a Samsung plant under development in Texas and separately held preliminary talks with Intel about enlisting its chipmaking services. However, both efforts remain at early stages and have not resulted in any orders so far, the sources said.

Concerns Over Reliability and Scale

While diversifying suppliers could offer Apple a secondary option, the company is wary of using non-TSMC technology, citing concerns about reliability and scale. TSMC has long been the sole manufacturer of Apple's advanced processors, which power iPhones, iPads, and Macs. The iPhone 17-family chips, for instance, are built on a variant of the same TSMC process used for many leading AI chips. Apple's caution reflects the high stakes involved: any disruption in chip quality or supply could affect the performance and launch of its flagship products. The company has previously experienced supply shortages that hampered iPhone sales.

Supply Constraints Hit iPhone Sales

Apple warned of continuing chip supply constraints when it reported results last month. Then-CEO Tim Cook said that iPhone sales were held back in the quarter by supply constraints for the advanced processor chips that form the brains of the device. The shortages underscored Apple's vulnerability to a single supplier and the broader semiconductor crunch affecting the industry. By exploring alternatives, Apple aims to secure a more resilient supply chain. The discussions with Intel and Samsung come as the U.S. government pushes to boost domestic chip manufacturing through the CHIPS Act, which provides subsidies for semiconductor fabrication.

Intel and Samsung: Potential Partners with Challenges

Intel, once the world's leading chipmaker, has been investing heavily in its foundry business to compete with TSMC and Samsung. Its stock has surged recently, making it worth more than Oracle Corp., as investors bet on its turnaround. Samsung, already a major memory chip producer, is expanding its foundry operations with a new plant in Texas. However, both companies face steep challenges in matching TSMC's manufacturing prowess and capacity. Apple's concerns about reliability and scale suggest that any partnership would require significant time and investment to meet its exacting standards.

Geopolitical and Strategic Implications

Apple's move to explore U.S.-based chip production reflects broader industry trends to diversify away from Taiwan, which faces heightened geopolitical risks. The Biden administration has made semiconductor self-sufficiency a priority, and Apple's potential shift could align with national interests. For Apple, the stakes are high. The company's devices rely on cutting-edge chips that give them a competitive edge. Any misstep in chip sourcing could delay product launches or degrade performance. The exploratory talks indicate that Apple is willing to consider new partners but remains cautious.

What Comes Next: Early Stage Negotiations

The discussions with Intel and Samsung are preliminary, and no commitments have been made. Apple is likely to continue evaluating the capabilities of both companies while maintaining its relationship with TSMC. The outcome could reshape the global semiconductor landscape, potentially reducing TSMC's dominance. Industry analysts will watch for any signs of progress, such as test orders or joint development agreements. For now, Apple's chip supply chain remains heavily dependent on TSMC, but the company is clearly preparing for a future with more options.

The bottom line

• Apple is in early talks with Intel and Samsung to produce main device chips in the U.S., aiming to reduce reliance on TSMC.
• No orders have been placed; discussions are exploratory and face concerns over reliability and scale.
• Chip supply constraints have hurt iPhone sales, prompting Apple to seek alternative suppliers.
• Intel's stock surge and Samsung's Texas plant expansion position them as potential partners.
• The move aligns with U.S. efforts to boost domestic chip manufacturing amid geopolitical tensions.
• Apple's chip strategy remains centered on TSMC for now, but diversification is a long-term goal.