Apple CEO Tim Cook has announced plans to source over 19 billion chips from the US for the company’s devices.

During a conference call regarding second-quarter earnings, Cook said that Apple will obtain tens of millions of processors from a facility in Arizona this year.

These chips will be produced at Taiwan Semiconductor Manufacturing Company’s (TSMC) plants in the state, which have begun manufacturing processors for low-end iPads and Apple Watches.

Cook also noted that Apple is sourcing glass for iPhone screens from the US, likely referring to Corning Inc.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Apple’s two-decade journey from chip buyer to chip designer transformed its supply chain leverage

Apple’s announcement about sourcing 19 billion chips from the US represents the culmination of a strategic transformation that began in 2008 with the acquisition of P.A. Semi for $278 million, a pivotal move in Apple’s chip development strategy 1.

This acquisition, championed by Steve Jobs, gave Apple the engineering expertise to design its own processors rather than relying entirely on third-party manufacturers, beginning with the A4 chip that powered the original iPad in 2010 2.

The strategic shift to custom silicon development allowed Apple to optimize power consumption and performance specifically for its products, creating a competitive advantage that Intel and other chip makers couldn’t match 3.

By controlling more of its chip design, Apple gained significant leverage over its supply chain. This allowed Apple to dictate geographic sourcing preferences, such as the Arizona TSMC plant, in response to geopolitical pressures while maintaining its performance requirements.

2️⃣ Tariff pressures are rapidly reshaping global tech manufacturing footprints

Cook’s emphasis on US chip sourcing directly responds to escalating trade tensions, as the Trump administration’s tariffs impose a minimum 10% tax on global imports, significantly impacting tech supply chains 4.

These tariffs aren’t paid by foreign manufacturers but rather by US distributors who ultimately pass these costs to consumers, creating strong financial incentives for companies like Apple to adjust their supply chain strategies 4.

The semiconductor industry is particularly vulnerable to these pressures, with chip manufacturing historically concentrated in Taiwan and other Asian countries, explaining why Apple is highlighting its domestic sourcing plans 4.

The complexity of modern tech supply chains, where products contain components sourced from multiple countries, means companies must make strategic decisions about where certain manufacturing processes occur. Apple’s decision to source processors from Arizona represents a calculated response to these trade pressures.