Apple Is Reportedly Close to Making More of Its Chips In-House
A major big tech player is going more in-house than ever.
Apple might be bringing more of its chip production process in-house, since it announced it was establishing a new office designed to replace several crucial components that, until now, were developed by Skyworks and Broadcom, according to an initial Bloomberg report.
While the global chip shortage is significant to this decision, it's unclear how rising tensions between the U.S. and China will play into Apple's production practices.
Apple has shown interest in developing its own 5G chips
The newly formed office is slated to specialize in the development of "wireless radios, radio-frequency integrated circuits and a wireless system-on-a-chip," while also building "semiconductors for connecting to Bluetooth and Wi-Fi," added the report. The M- and A-Series SoCs that include the GPU and CPU for Apple's iPhones and Macs will be the primary benefactors of this move, there are plenty of other chips inside of these machines. And they manage a wide variety of things, from USB connectivity, wireless charging, and much more. Broadcom and Skyworks provide a vast array of the iPhone's third-party-sourced parts, according to iFixit's iPhone 13 Pro breakdown. But now, it seems Apple has decided to design its own chips for this hardware.
At present, one of the most significant third-party chips housed within the iPhone's modem is produced by Qualcomm. In the past, Apple had briefly pivoted to Intel parts amid a legal battle that lasted years. But it's not a big secret that Apple has laid plans to develop its own 5G chips, instead of relying on and paying the price for Qualcomm's. And there were many hints along the way: in 2019, Apple bought Intel's smartphone modem business for roughly $1 billion. Since then, its become known that Apple is considering pivoting to its own proprietary modems for its iPhones, possibly as early as 2023, according to a report from The Verge.
Industries are building up domestic production amid tense international relations
Many might suspect that Apple is only doing this because it wants to expand control of its complex product, so that all hardware is sourced from no one but Apple itself. But this could be a means of shoring up its production flow against the vacillating market supply chain. Apple is already experiencing the effects of the global chip supply shortage, especially for parts developed by suppliers like Broadcom. These shortages have already forced Apple to fall back on its initial production targets for October. But if it moves all of the chip-making phases of iPhone, Mac, and other device production to in-house sources, the company would be much more resilient in the face of increasing economic pressure points, which extend beyond the immediate problems of the supply chain.
Many industries are already moving more of their production capacities in-house, but some are even turning more toward domestic sourcing. Earlier this month, General Motors signed a deal to extract rare metals for the motors in electric vehicles from North America, specifically from MP Materials' mine in Mountain Pass, California. With mounting tensions between the U.S. and China, it would be tempting to think Apple is also looking for ways to secure its chip manufacturing process outside of China. Except for the $275-billion deal that Apple CEO Tim Cook signed with officials in China back in 2016. This suggests that, were a conflict to unfortunately erupt, it's hard to say how Apple would react, since its revenue comes from a global, and not a national market.