Apple is engaging in early-stage discussions with Intel and evaluating manufacturing facilities from Samsung Electronics to diversify its core device chip production away from Taiwan Semiconductor Manufacturing Company (TSMC), according to Bloomberg. The company aims to reduce its heavy reliance on TSMC by exploring alternative manufacturing partners.
Apple’s negotiations have included visits to a Samsung facility in Texas that is expected to produce advanced chips. These moves come in the context of an internal reorganization that combined Apple’s hardware engineering and hardware technologies teams under Chief Hardware Officer Johny Srouji. The restructure split the hardware team into five key areas, with one focused on Silicon, managed by long-time Apple employee Sri Santhanam.
Challenges in Apple’s diversification efforts pertain to the manufacturing scale and consistency that TSMC offers, which is difficult for companies like Intel and Samsung to match. According to Bloomberg, TSMC’s dominance as a made-to-order chip manufacturer has made it a vital partner for Apple.
For over ten years, Apple designed its main processors, relying on TSMC to manufacture them using the latest production techniques in Taiwan. The most recent iPhones and Macs utilize the 3-nanometer fabrication node. Apple has faced supply-chain issues exacerbated by heightened demand for Macs suitable for running artificial intelligence models and the growth of AI data centers. These shortages have underscored the necessity for Apple to consider additional suppliers.
While talks with Intel and Samsung began prior to recent component shortages driven by the AI boom, the situation has become more urgent in light of Apple’s acknowledgment of its current supply chain limitations during a recent earnings call.
Both Intel and Samsung would gain significant advantages by securing a contract with Apple. For Intel, partnering with Apple would validate its foundry efforts under CEO Lip-Bu Tan and revive a historic relationship that ended when Apple transitioned to its own Apple Silicon chips. For Samsung, acquiring Apple as a client would bolster its position in the advanced chip market, where it currently lags behind TSMC.
Apple’s dependence on TSMC is further complicated by geopolitical tensions surrounding Taiwan and China. Diversifying production could mitigate risk and support Apple’s initiative to return advanced manufacturing to the U.S., especially if a deal is reached with Intel, which now benefits from U.S. government equity support.
However, discussions with Intel and Samsung Electronics are still preliminary, with no orders placed. Bloomberg reports that Apple has reservations about utilizing non-TSMC technology, which may influence future decisions regarding alternative partners.
