Transcription
Every device you own, every electronic object in your house, has chips in it. Sometimes, lots of them. All of those chips start in a place like this. For decades, most of the world's chips have been made overseas, but as tensions with China have risen, it has become clear just how dependent US companies are on foreign factories, pushing Washington to speed up its effort to bring critical supply chains back home.
Today, Apple is announcing that it will invest $600 billion, that's with the B, in the United States over the next four years.
I wanted to see what this reshoring looks like on the ground and get a sense of how far we still have to go. To find out, I suited up. Definitely the most intense bunny suit of the trip. And joined the world's largest buyer of chips, Apple, and several of its executives, on an exclusive tour of its partners' facilities across the desert Southwest. My first stop is the start of the supply chain. This GlobalWafers facility, which opened last year, produces silicon wafers, which are the foundation for what will eventually become iPhone chips.
Silicon is basically formed from sand. There's an ancient gift to the semiconductor industry in the mountains of North Carolina, where there's some of the world's most pure sand. A lot of the silicon is sourced from there.
The world's most pure silicon. This is heavy. To transform raw silicon into a wafer, it must first be melted down in this 35-foot-tall machine. So what you have in here is what they call a silicon crown, and it's spinning ever so slightly counterclockwise. It's an amber color because it's almost molten. It's 2,500 degrees Fahrenheit in there. They're growing silicon. The result is this six-foot-long torpedo shaped ingot that weighs hundreds of pounds. I'm guessing this is what comes out of that machine.
That's right, you're looking at the end of it, finishing it here. It's cooled off, all of its bulk properties are solidified, this thing is ready to go.
The ingot gets sliced into wafers, then they're polished and boxed up. You're doing 10,000 wafers. How often?
Today, we're doing 10,000 a month. We're just starting up.
10,000 a month.
Some of these processes, even when you put them in line, can take months and months to get the quality and the purity down to where they need to be. And that's just the nature of the demanding specs that we're being asked to achieve.
Who's the most demanding customer you have?
Apple.
Every device Apple makes relies on chips. iPhones have more than 30, some that are made of multiple chips themselves. Many chips, and nearly all of the most advanced ones, are made in Taiwan, which China has threatened to annex. Concentrating chip supplies on an island that could be invaded, or face steep US tariffs, or get hit by a major earthquake is a big risk to Apple's business. Much of the company's supply chain relies on partners like GlobalWafers, itself a Taiwan-based company. But Apple is a large customer, so it has a lot of leverage to push suppliers to make more products in the US. Apple's not building this factory, right?
We're not building the factory, but we are driving our suppliers to use this factory. And so one of the things that we can do to help GlobalWafers is to have our engineers qualify the wafers that are coming out of their production line, so that our foundry partners then can purchase from them. If we didn't qualify that and spend that time, and it's very intense work, they wouldn't be able to use it to make chips for us, so we can drive them to use locally-sourced components, like these wafers.
By qualify, Tom means that the quality of these wafers needs to be verified before they can be turned into chips. That process is going much faster, GlobalWafers told me, because of Apple's pressure on chip makers to use these wafers. Taiwan Semiconductor Manufacturing, or TSMC, is the world's largest chip maker. It takes blank silicon wafers and turns them into chips. It's the next stop in Apple's supply chain. Stretching over 1,100 acres, TSMC's Arizona site is one of the largest construction projects in the US and is projected to cost $165 billion. This facility is crucial to Apple's reshoring efforts, but it's still a work in progress. Only one fabrication plant is currently making chips on this site, while two more fabs are under construction here. The vast majority of TSMC's production still takes place in Taiwan, where it has four facilities that pump out more than 100,000 chip wafers per month. The Arizona facility may not reach similar volumes for a decade or more. The complexity involved in scaling up manufacturing also means that the chips made here in Arizona are still a generation behind chips made in Taiwan. You're already doing this in Taiwan. Why can't we just, you know, do this-
Plop it in, and...
Plop it in, and do it by year-end? Why does it take so much time?
It's really complicated in terms of the structures, because remember, what we're building is atom-level that really requires a complex infrastructure, requires a complex equipment set that you can't just plop in from anywhere.
When we first went to GlobalWafers, we saw the creation of a blank wafer.
Right.
And then, what we've done here is we've taken that wafer, put it in the incredibly sophisticated machines that cost hundreds of millions of dollars in that building.
Yes.
To etch all of these tiny, tiny transistors, trillions of them, probably, across this whole wafer.
Yes.
Can I trade you?
Sure.
All right. Let's be very careful, it's very light.
It's very light.
How much does one of these cost when it's done?
Tens of thousands of dollars.
Tens of thousands of dollars, huh? So, I can't play Frisbee with you.
No.
We couldn't see exactly how this wafer was made. TSMC doesn't allow filming inside its plant. It even covered our phone cameras as a precaution. But the machines inside the TSMC fab that patterned that wafer come from ASML, a Dutch company that operates a training facility just down the road in Phoenix. Wow. The workers behind me are maintaining what is probably the most sophisticated machine ever built by man. It's inside these that chips are patterned to have billions of transistors. ASML's extreme ultraviolet lithography machine works by shooting lasers into molten tin to create a wavelength of light that doesn't exist naturally on earth. The light paints hundreds of chips onto wafers flying around at more than 20gs. Because chips can have dozens of layers, this process repeats over and over. What's more, transistors have to be placed with nanometer-level precision or the whole wafer can be ruined. If you are building a chip fab, you need machines like this because this is where the magic happens. These machines cost between 100 and $400 million each. Most go to Asia. Just 12% of ASML's sales last year were in the US, though that was up from 5% in 2021. Apple's supply chain ends at manufacturing facilities, such as this Foxconn plant. Here, Apple devices are assembled and chips are installed inside them. This is the first time cameras have been allowed inside. The AI servers made here contain Apple's most advanced chips, chips that can't yet be made in the US. What are we looking at here? What are these workers doing?
They're installing some of the subassemblies here. There's multiple different subassemblies and the boards that come in.
Okay.
And they're all installed here at various stations.
And a lot of the workers here that Taiwan brings in who have the expertise you described can be transferred to American workers?
These are all local workers.
Okay.
Actually, they're all hired here locally. You'll see some workers from overseas, or some technicians rather, from overseas during the beginning of the setup, if needed.
Apple and Foxconn are also expanding this operation in Houston to include a new assembly plant. Oh, wow, it keeps going for a while. Look at that.
The other space was exactly like this in January last year.
We're very excited to tell you that later this year, we will be beginning Mac mini manufacturing right here.
Okay.
In this space.
How many Mac minis do you make a year?
We make thousands every week.
Will all Mac mini production come here?
Over time, we wanna scale Mac mini here to serve our customers in this area.
Okay, so it's manufactured also in Asia today.
Yes.
And you'll move some of that production here, and scale it over time?
Yes. Yes. What would it take to be able to do iPhones in the United States?
Well, we are very focused on the things that we believe are critical for future innovation and things that will differentiate our products over time. And so that's what we are partnering and investing in here, and we're getting great support on that. You know, it's components, it's subassemblies, it's advanced silicon.
This isn't the first time Apple has added manufacturing operations in the US. In 2013, Apple started making a new Mac Pro desktop in Austin, Texas, but demand was soft. And by 2019, Apple planned to move Mac Pro production to Asia. But the company changed course, and Tim Cook toured the factory with President Trump, who falsely claimed that he'd opened the facility. After committing to keep it, Apple received tariff exemptions. A similar pattern played out this past August when Apple made a big investment commitment, and in return, won tariff relief. You do the Mac Pro in Austin?
Yes.
How many do you have there now ballpark?
It's a much smaller operation. We're still doing exactly what we're doing at the beginning, it's just that the customer demand is not the same that it used to be. But remember, back then, we didn't have a Mac Studio, we didn't have a Mac mini with advanced silicon, and we have those capabilities now.
The Mac mini is a bigger seller than the Mac Pro and has grown in popularity because it is useful for running AI models. Even so, the mini is still a small product for Apple. The company sells less than 1 million Mac minis globally per year. By contrast, Apple sells around 240 million iPhones per year. Now, to be clear, as big as this warehouse seems, it is a drop in the bucket compared to the company's overall global manufacturing footprint. What I saw were really the very first steps Apple is taking in its effort to bring its chip supply chain stateside. It's a start, but the US has a long way to go to match Asia.