The new law includes $39 billion in manufacturing incentives to offset some of the higher costs, according to the White House. Another $13.2 billion was allocated for research and development and workforce development. The law provides a 25% investment tax credit for capital expenses for manufacturing of semiconductors and related equipment.
Apple already designs products and chips in the U.S., Zino noted. And it has committed to get about a third of its chips made at Arizona plants that Taiwan Semiconductor Manufacturing Corp. is building, set to open beginning next year.
China and issues in reshoring tech supply chain
Apple’s move toward U.S.-made chips will take time, Zino said, because Apple has had to prod its partner to make its most advanced products in the states. The most advanced devices use 3-nanometer chips that TSM is not expected to produce in Arizona until 2026, but has been making in Taiwan since last year, he said.
“They will continue to use [offshore factories] for years to come to make the next-generation phones,” Zino said.
Apple did not respond to a request for comment, but CEO Tim Cook was asked by an analyst on a recent earnings call about whether it had studied the “elasticity of demand relative to small price increases” that could occur related to the CHIPS Act. Cook did not offer a direct answer. “We don’t know at this point exactly what that will be, but we’re all in, in terms of being the largest customer for TSMC in Arizona. I’m very proud to take part in that. That’s what I would say about that,” he said.
Apple’s moves to diversify away from China will be gradual because it needs to stay on good terms with the government in Beijing, said Jeff Fieldhack, a research director at Counterpoint Research. The world’s most valuable company makes an estimated 90% to 95% of iPhones in China, and got 43% of sales in fiscal 2023 from Greater China, including Taiwan.
“It’s a tough dance for Apple,” Fieldhack said.
Morcos says a top concern of his is the narrowness of the CHIPS Act. Without bringing related device manufacturing back to the U.S., such as device batteries, sensors, cameras, antennas, and hundreds of other components, the manufacturing process could require the most critical component to be produced stateside, then shipped overseas to be assembled with hundreds of other components into a device that is then shipped back to the U.S. for the American consumer.
Nonetheless, the work on planning U.S. factories is well under way. Samsung is considering $200 billion in U.S. investment in chips plants after committing to a $17 billion factory near Austin, Texas, with planning of up to 11 fabs in the area. Companies including Intel, Micron, Global Foundries and Qualcomm have also announced plans to expand manufacturing in the U.S.
To fulfill the act’s broader purpose of reshoring tech production, Morcos said, more action will be needed to lure plants that produce device batteries and the devices themselves.
“$54 billion is a ton of money,” O’Donnell said. “Adding that kind of money to the economy is going to affect the economy. But it’s a drop in the bucket compared to the other money that went around.”
