Apple Doubles Down on U.S. Manufacturing

Oct 04 2022 |
| Photo by Niels Eptin via Flickr

The iconic iPhone maker’s manufacturing remains entrenched in China, but recent shifts have shown a focused effort to diversify its supply chain.

The factory openings keep rolling in! It seems like every week we have got dozens to cover, but that’s exactly the kind of problem we love to have. Today’s round-up is chockfull of high-tech fabricators, but news from Apple leads the way.

Apple is stepping up its United States manufacturing supply chain by nearly doubling the number of its suppliers that manufacture in America, with California taking the bulk of the U.S. production, The Wall Street Journal reported Tuesday.  

A supplier list released by Apple for the 2021 fiscal year shows 48 of its 180 total suppliers manufacture in the U.S., whereas only 25 suppliers manufactured in the U.S. in 2020, according to Apple’s supplier list for that year. Nonetheless, Apple remains deeply entrenched in China for the bulk of its manufacturing, with 150 of its suppliers in 2021 still manufacturing in China.  

However, The Wall Street Journal notes that “although still a minority, [the U.S. sites] are playing a more important role. Supplier officials said the operations in California typically aren’t large factories like those in China. Instead, the operations tend to be smaller-scale production lines, test lines for new products or service-related operations, they said.”

Furthermore, other recent news suggests that Apple has a larger plan at play.

This past month, the iconic Cupertino, Calif., company announced its decision to assemble the iPhone 14, the latest phone in its lineup, in India. Though the tech giant has been assembling iPhones there since 2017, previous manufacturing was predominantly for older models. Thus, the move appears to signal Apple’s plans to diversify its supply chain.

Here’s CNBC’s take:

“Apple still relies heavily on China for the majority of iPhone production. But Beijing has persisted with a strategy of lockdowns to control Covid resurgences even as most of the world looks to open their societies. The zero-Covid policy has disrupted production at factories across China where lockdowns take place and highlighted some potential weak spots in Apple’s supply chain.”

Other American companies have also complained of the hindrance that Covid control measures have put on businesses operating in China. A US-China Business Council survey conducted in August found that 96% of respondents “said they saw negative effects from Covid controls on their businesses, including halted investment, lost profit, and disrupted supply chains,” the South China Morning Post reported.

Meanwhile, the Biden administration is going all out to entice semiconductor manufacturers and other high-tech fabricators to the United States through legislation like the $52 billion CHIPS Act.

Apple is far from the only technology company that has turned its attention to U.S. manufacturing. Micron and Texas Instruments are moving forward with their own billion-dollar investments in U.S. manufacturing sites.

Micron announced Tuesday that it will spend as much as $100 billion over the next two decades to build the largest semiconductor fabrication facility in the United States, creating nearly 50,000 jobs in New York.

“This historic leading-edge memory megafab in Central New York will deliver benefits beyond the semiconductor industry by strengthening U.S. technology leadership as well as economic and national security, driving American innovation and competitiveness for decades to come,” said Micron President and CEO Sanjay Mehrotra in a press release that credited the factory’s planned opening to the CHIPS Act.

Over in Richardson, Texas, Dallas-based Texas Instruments also had big news. The company began initial production at the company’s 300-milimeter wafer fab, which will ultimately manufacture more than 100 million analog chips every day.

Amidst all this growth in America’s domestic high-tech manufacturing industry, the Biden administration is reportedly planning new restrictions on Chinese companies’ access to advanced semiconductor technology in what The New York Times labels as possibly “some of the most significant steps taken by the Biden administration to cut off China’s access to advanced semiconductor technology.”

The measures, which may be announced this week, are expected to block companies that use American-made technology from selling to Chinese firms, further improving prospects for America’s domestic semiconductor industry.