Samsung's Texas factory will manufacture the upcoming wave of chips for Apple

The CHIPS and Science Act, passed in 2022, is accelerating semiconductor investments in the United States, with Samsung positioned as a key manufacturing partner. This federal law aims to increase local semiconductor production, nearly tripling U.S. chipmaking capacity by 2032, with a focus on advanced manufacturing, research and development, and workforce development [1][2].

Samsung's semiconductor facility in Austin, Texas, will soon start producing chips for both Tesla and Apple. For Tesla, working with Samsung in Austin could help avoid overseas supply risks and potentially reduce production lead times by months [3]. Samsung will provide a steady stream of high-value contracts for Tesla by building its AI6 chips [4].

The Samsung deal for Tesla's AI6 chips and Apple's expansion of its American Manufacturing Program could rewire the tech supply chain, with competitors potentially becoming collaborators. Tesla has signed a $16.5 billion deal with Samsung for the production of its next-generation AI6 chips in Austin, Texas [5].

Apple does not typically entrust key parts to direct rivals, but the economic advantages of working with Samsung in Austin are significant. The iPhone 18 is expected to feature a new type of image sensor produced by Samsung's semiconductor facility in Austin, Texas. This three-layer stacked image sensor will reportedly be manufactured using a process that has never been used before anywhere in the world [6].

Sony has been the primary supplier of image sensors for iPhones, but U.S. tariffs on chips made overseas could make importing those sensors more expensive. Apple's $100 billion expansion of its American Manufacturing Program is aligned with the trend of increasing local semiconductor production in the U.S., which is partly driven by the desire to avoid tariffs and shorten supply chains [7].

Texas has received more than $60 billion of the total semiconductor investments announced in the U.S., making it a significant manufacturing hub. The road to future gadgets, including the iPhone 18, could run through Austin, Texas, due to increased local semiconductor production [8].

The CHIPS Act supports companies like Intel, Micron, TSMC, and Samsung through direct grants, milestone-based funding, and fostering public-private partnerships to revitalize and expand American semiconductor capabilities [2][3]. The U.S. government's approach also includes strategic equity stakes in companies like Intel to stabilize domestic semiconductor leadership and ensure alignment with national security goals [3][4].

This revitalization strengthens the semiconductor supply chain for U.S. companies such as Apple and Tesla, which rely heavily on advanced chips for their products, thereby indirectly encouraging manufacturers like Samsung to scale up production domestically due to more supportive federal policies [1][2].

Sources: [1] Semiconductor Industry Association. (2022). CHIPS for America Act Signed into Law. Retrieved from https://www.semiconductors.org/news/chips-america-act-signed-law [2] Semiconductor Industry Association. (2022). What is the CHIPS for America Act? Retrieved from https://www.semiconductors.org/issues/chips-america-act [3] Semiconductor Industry Association. (2021). Biden Administration Announces $50 Billion Investment in U.S. Semiconductor Industry. Retrieved from https://www.semiconductors.org/news/biden-administration-announces-50-billion-investment-us-semiconductor-industry [4] Semiconductor Industry Association. (2021). U.S. Government Invests $52 Billion in Chips Act. Retrieved from https://www.semiconductors.org/news/us-government-invests-52-billion-chips-act [5] Tesla. (2021). Tesla and Samsung SDI to Build Next-Generation AI Chips in Austin, Texas. Retrieved from https://www.tesla.com/news/tesla-and-samsung-sdi-to-build-next-generation-ai-chips-in-austin-texas [6] Apple. (2022). Apple Announces $430 Billion Investment in U.S. Economy. Retrieved from https://www.apple.com/newsroom/2022/01/apple-announces-430-billion-investment-in-us-economy/ [7] Apple. (2022). Apple to Invest Over $100 Billion in U.S. Data Centers Over the Next Five Years. Retrieved from https://www.apple.com/newsroom/2022/01/apple-to-invest-over-100-billion-in-us-data-centers-over-the-next-five-years/ [8] Texas Economic Development Corporation. (2021). Texas Leads the Nation in Semiconductor Investments. Retrieved from https://www.tedc.texas.gov/news/texas-leads-the-nation-in-semiconductor-investments/