Apple has announced a multi-billion dollar deal with chipmaker Intel to use more US-made parts for its devices. The deal is part of Apple’s plan to invest $430 billion in the US economy and diversify its supply chains amid rising tensions with China.
What does the deal entail?
Under the multi-year agreement, Intel will develop 5G radio frequency components with Apple that will be designed and built in several US facilities, including Chandler, Arizona, where Intel has a major factory. The components are part of a radio-frequency system that helps iPhones and other Apple devices connect to mobile data networks.
Intel is already a major supplier of processors and modems to Apple, with about one third of its revenue coming from the iPhone maker in its two most recent fiscal years. The deal will expand the existing relationship between the two US tech giants and boost Intel’s position in the 5G market.
The two companies did not disclose the size of the deal, but analysts estimate that it could be worth several billions of dollars over the course of several years. Intel said that the new agreements require it to allocate Apple “sufficient manufacturing capacity and other resources to make these products.”
Why is Apple investing in US-made chips?
Apple said that the deal is part of its commitment to support American innovation and create jobs in the US. The company said that it currently supports more than 2.7 million jobs across all 50 states, including 1.9 million jobs attributable to the App Store ecosystem.
“All of Apple’s products depend on technology engineered and built here in the United States, and we’ll continue to deepen our investments in the US economy because we have an unshakable belief in America’s future,” Apple CEO Tim Cook said in a statement.
The deal also comes as Apple faces increasing pressure from both US lawmakers and consumers over its reliance on Chinese manufacturers and components. The US-China trade war has disrupted global supply chains and raised the costs of importing goods from China. The US has also imposed sanctions and restrictions on several Chinese tech firms, including Huawei and SMIC, over national security and human rights concerns.
Apple has been gradually diversifying its supply chains, building more products in India and Vietnam and sourcing chips from other suppliers, such as Taiwan Semiconductor Manufacturing Co (TSMC) and Samsung. Last year, Apple said that it will buy semiconductors from a new TSMC plant under construction in Arizona. In 2022, Apple also announced plans to make the iPhone 14 in India, a significant milestone in the company’s strategy to diversify manufacturing outside of China.
