Apple can’t make chips fast enough, but that’s only part of the story

Apple has held “exploratory” talks about manufacturing processors for its devices in the US, Bloomberg reports. The move seems to reflect Apple’s need to secure additional chip supplies to meet growing demand for its products, but could also represent a contingency plan to reduce the company’s reliance on Taiwan Semiconductor Manufacturing Company (TSMC’s) advanced manufacturing facilities in Taiwan.

I doubt this means Apple doesn’t want to work with TSMC, nor does it mean TSMC is cooling on Apple. I suspect company management is far more concerned about what might happen in the event China attacks TSMC’s home nation. 

Contingency planning 

That concern seems legitimate in the context of unravelling of international relations and a recently-disclosed warning the CIA gave to tech leaders back in 2023. Executives from Apple, AMD, and Qualcomm were all warned that China might attack Taiwan. Such an attack would comprise a huge threat to the entire tech industry. Speaking at the World Economic Forum in January, US Treasury Secretary Scott Bessent warned of an “economic apocalypse” if Tawain were to be blockaded or its capacity destroyed.

Apple derives nearly every chip it uses in its devices from factories in Taiwan. To reduce that risk, it is investing in TSMC factories for this in the US, including at the Fab 21 site in Arizona where small-scale processor production has already begun.

Checks and limits

Setting up new processor production facilities is expensive, takes time, and requires teams of specialized tooling engineers and operators hard to find in the US. In the medium term, you should expect those missing skill sets to be served by robotics, though that will also take time. Apple is investing in AI-augmented manufacturing across its supply chain right now.

Manufacturing processors at the scale Apple requires is not yet possible in the US, so it makes sense for the company to explore other options to meet demand. These early talks appear to show the company is considering the options available to it.

But even if its chip manufacturing supply weren’t threatened by growing international tensions, Apple has another challenge. It can’t make enough chips to satisfy demand. This was a central thesis during the company’s recent financial call when Apple CEO Tim Cook confessed Apple couldn’t meet demand for MacBook Neo, Mac mini, or Mac Studio because it couldn’t get sufficient supply of the high-end nodes it uses in SoC production. 

“The constraints that we have are driven by the availability of the advanced nodes that our SoCs are produced on…,” Cook said. “We’re seeing less flexibility in the supply chain than normal.”

 Those high-end nodes are, of course, made in Taiwan. 

The scale of the problem

To get a sense of the scale of the Apple supply chain, the company confirmed that it sourced 19 billion chips from across a dozen US states in 2025. Most, though not all, of these processors are far less advanced than the main processor in Apple’s devices; they’re lower tier and used for things like power management, Wi-Fi, or display drivers. Apple is investing hundreds of billions of dollars to expand its manufacturing supply chain in the US, including a commitment to assemble Mac minis here. But it will take a very long time to completely replicate what it has already, particularly in China and Taiwan. 

Apple has a golden problem to further complicate the sum. Demand for its products is increasing. Apple confirmed this is across all its products. The company also saw growth in every market, including strong double-digit growth in Greater China and the rest of Asia-Pacific. People are flocking to its platforms, giving it an installed base of 2.5 billion devices — including “record numbers” of new Mac customers and record iPhone 17 sales. Meanwhile, demand for the MacBook Neo is “off the charts,” Cook said. This Apple adoption curve is real, and the challenge of meeting that demand is also real, which is why Cook warned that supply constraints would persist for months.

Apple needed to start somewhere

This is the background to Apple’s reported meetings with potential chip suppliers at Intel and Samsung, neither of which are likely to be able to match TSMC’s scale. Apple hasn’t made any decisions yet and these talks are described as preliminary. But they reflect the company’s need to protect its business against additional shocks while ramping its supply chain up to meet new demand. These discussions could go nowhere, of course. In the meantime, TSMC expects to make 100 million processors for Apple at its US factory this year.

That remains a drop in the ocean compared to the scale of demand Apple faces. It doesn’t meaningfully reduce Apple’s near-term risk, but is at least a start. The question for the rest of us will be if Apple, its partners, or the wider tech industry, can mitigate against these risks swiftly enough.

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