Apple executives have visited Samsung Electronics' (005930.KS) semiconductor plant in Texas, as the iPhone maker weighs commissioning Samsung and Intel to produce core chips used in its iPhones and Macs. The move signals Apple's intent to shake up a supply chain heavily concentrated at Taiwan's TSMC.
Bloomberg reported Tuesday that Apple is in discussions with Intel and Samsung Electronics over contract production of system-on-chips (SoCs). According to sources, Apple is discussing the use of Intel's foundry services and has conducted an on-site inspection of the advanced plant Samsung is building in Texas.
The talks are still at an early stage. Bloomberg said, "Apple may choose not to select another partner due to concerns over technologies outside of TSMC."
Behind the move is a severe chip shortage. A surge in artificial intelligence (AI) data center investment has overlapped with Mac demand that exceeded expectations. Apple CEO Tim Cook said during last week's earnings call that "supply chain flexibility has declined compared to before," adding that "the chip shortage is a constraint on growth, and it will take months to balance supply and demand." Cook said the supply of core processors is a bigger problem than memory.
The need for supply chain diversification has also grown. Apple has pursued a strategy of maintaining at least two suppliers for key components. For SoCs, however, TSMC accounts for about 60 percent of production. Cook raised the issue at an employee meeting in 2022. Concerns over supply disruptions have persisted in Taiwan amid ongoing tensions with China.
Apple also receives some chips from TSMC's plant in Phoenix, Arizona. About 100 million units are scheduled to be supplied this year. However, that accounts for only a portion of the total and is insufficient to reduce reliance on TSMC.
The latest supply disruption has also affected the iPhone 17 Pro line. Samsung Electronics is already ramping up supply of peripheral components, including power management integrated circuits (PMICs), for the iPhone.
