Apple plans to source chips from the US

Apple announced that it plans to source chips used for its devices from a plant under construction in Arizona in the United States from 2024. The chips from Arizona will replace the ones currently shipped from the TSMC local factories in Taiwan. The computer chip factory currently under construction in Arizona, Phoenix, will be completed by 2024.

Apple’s decision reflects its plans to shift production bases of chips and other key strategic items from Asia and other parts of the world to the U.S. The Joe Biden administration enacted the CHIPS and Science Act in July this year, which provides incentives of more than 50 billion U.S. dollars to companies building manufacturing facilities in the US. TSMC is considering investing an additional 12 billion dollars in building more factories. Businesses with high demand for semiconductors, such as Apple, are taking up opportunities through government policy. Investor Warren Buffett’s company purchased 60 million ADRs of TSMC worth 5 trillion won.

The U.S.’s support for semiconductors will likely encourage companies to leave their production bases and relocate to the U.S. Micron Technology and Intel have announced plans to invest 130 trillion won and 40 trillion won, respectively, in building new factories, leading the way to revive the U.S. manufacturing industry. These investments reflect ambitions to regain market share taken away by Samsung Electronics and TSMC. The U.S., which holds semiconductor source technology, is emerging as a strong competitor. This signals a red flag for Samsung Electronics, aiming to become number one for system chips by 2030.

Eight Japanese companies, including Sony, NEC, Toyota, and Softbank, have joined forces to build a state-of-the-art semiconductor company backed by government support of 670 billion won. The budget scale poured into R&D collaboration with the U.S. exceeds 3 trillion won. The EU has also announced massive investments, and China is quickening its pace to achieve its goal of local sourcing of chips by 70%.

Amid this intense competition, discussions for the proposed K-Chips Act to strengthen the competitiveness of Korean semiconductor companies have not even started since it was proposed in August. It was left out of the top 50 legislative tasks elected by the main opposition Democratic Party, the majority party in the National Assembly. We should ask ourselves whether our views on government support for the semiconductor business are too restricted. If the current situation persists without the Korean government taking any action, Korea’s semiconductor industry may become colonized by other technological powerhouses.