Apple Falls Short of First Made-in-U.S. Chips

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In late February, Apple said it was ramping production of its first made-in-U.S. chips at TSMC’s Arizona facility to well over 100 million units in 2026. That claim is likely only partly true, because the silicon wafers made for Apple in Arizona must be shipped to Taiwan for advanced packaging into chips.

Apple declined to comment to EE Times after initially offering to provide clarification. Apple supplier TSMC responded to EE Times, making it clear that the company doesn’t provide advanced packaging at its Arizona facility.

“Currently, all of TSMC’s advanced packaging is in Taiwan,” a company spokesperson told EE Times. “As we’ve announced, there are plans for two advanced packaging facilities at our TSMC Arizona site.”

More than 80% of the world’s chip assembly is done in Asia, especially advanced packaging, according to a 2022 report from Washington D.C.-based think tank Center for Strategic and International Studies.

That concentration in Asia is a critical and potentially growing vulnerability for any semiconductor company that aims to build a resilient and secure supply chain. China has threatened to take over Taiwan militarily. Moreover, shipping wafers across the Pacific to Taiwan from the U.S. adds to production cost and slows time to market.

Choke point

Advanced packaging is a real choke point, according to Jimmy Goodrich, a tech advisor to U.S. global policy think tank RAND.

All high-volume CoWoS capacity—TSMC’s critical packaging technology that enables AI GPUs—remains in Taiwan today, Goodrich noted in a March 3 LinkedIn post.

“In Arizona, advanced packaging will come through two paths: captive packaging facilities in TSMC’s expansion plan and via Amkor,” Goodrich said. “Both won’t ramp until 2028 or later and at lower scale compared to Taiwan. Until then, wafers made in Arizona still depend on Taiwan for back-end integration.”

Advanced packaging is a pathway for an awaited return of tech leadership to the U.S. in semiconductors, according to Carol Handwerker, a professor at Purdue University. Advanced assembly—combining multiple dies such as processors, memory, and sensors into 2.5D and 3D chips—is a paradigm shift that takes place in a fab and not a highly labor-intensive assembly-line environment like OSAT facilities of the past. Yet advanced packaging will still take years to reach commercial scale in the U.S.

Amkor, the world’s second-largest chip packager, told EE Times late last year that the company remains “on track” for full operation of its first U.S.-based advanced packaging facilities in early 2028. Apple said it will be the first and largest customer of the facility. The schedule “reflects the complex nature of establishing advanced manufacturing capabilities at this scale,” an Amkor spokesperson told EE Times.

Last year, TSMC added $100 billion to its U.S. investment to start domestic production of AI chips. The expansion would include two advanced packaging facilities. While the company didn’t provide a timeframe for the facilities to start production, analysts expect sometime around the end of 2028.

Other companies with existing advanced packaging facilities in the U.S. include Intel and SkyWater. SK Hynix is building a factory that’s slated for production in 2028.

Doubling down on Asia

In the meantime, Taiwan-based ASE, the world’s largest chip packager, is doubling down on Asia, with expansions planned in Malaysia, South Korea, the Philippines, and Taiwan. The company has no plans to invest in the U.S.

ASE’s plan underscores the challenges the U.S. government faces in trying to shift a larger share of Taiwan’s semiconductor industry to the U.S.

Responding to a demand from U.S. Commerce Secretary Howard Lutnick in January, Taiwan’s top tariff negotiator said Feb. 8 that moving 40% of Taiwan’s chipmaking capacity to the U.S. is impossible. Lutnick’s 40% target matches that of his predecessor, former U.S. Commerce Secretary Gina Raimondo.

Taiwan’s near-90% share of the world’s advanced chip production is the result of an ecosystem developed over several decades that can’t be moved to the U.S., Taiwan’s Vice Premier Cheng Li-chiun said in an interview with Taiwanese TV channel CTS.

This year, ASE will be among the first to start panel-level packaging—alongside other advanced packaging projects—replacing the round silicon wafers the chip industry has used for decades. The company will open production at a “lights out,” fully automated, 310 × 310-mm panel facility by the end of this year. The panels are designed for AI processors requiring integration of multiple dies and high-bandwidth memory.

Given a 15 to 20% gap separating supply and demand for advanced packaging at TSMC, ASE is likely to be the primary beneficiary of outsourcing in the next two to three years, JPMorgan managing director Gokul Hariharan said in a February report.

Apple’s made-in-the-U.S. claim highlights a gap in the advanced packaging segment that’s likely to persist for several years. Chips that are 100% U.S.-made must not only be fabricated but also assembled onshore.

“Reshoring is absolutely the right strategy,” Goodrich said. “The investments in Arizona matter. But as long as AI demand continues accelerating faster than U.S. capacity ramps—and Taiwan keeps expanding ahead—our dependency will increase in the medium term.”