On the 44th anniversary of its initial public offering (IPO), Apple (AAPL) has plenty to celebrate. The tech sector leader has enjoyed a year of fairly steady growth, with shares rising 25%.
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This week also brought a key product update as Apple released a software update that features an integration between Siri and ChatGPT, a long-awaited advancement for artificial intelligence (AI).
Over the past few months, the release of Apple Intelligence through the iOS 18.1 update has kept Apple in full focus as consumers adjust to the new AI capabilities now available on their iPhones. The new features include generative writing and email and notification summary abilities to help users boost productivity.
As Apple doubles down on its AI endeavors, its need for chips will only increase. Thankfully, one of its primary semiconductor suppliers just announced a positive update that will benefit both Apple and itself.
Apple and CEO Tim Cook are getting ready to start buying chips that are made in the U.S.A.
Justin Sullivan/Getty Images
Apple chip supplier has a positive production outlook
Since long before the launch of ChatGPT kicked off the current AI revolution in November 2022, Apple has been working with Taiwan Semiconductor Manufacturing Company.
Related: Apple reveals new AI chip building partner, and it isn’t Amazon
In 2010, it offered the chipmaker a contract that helped propel it to the front of the semiconductor market. A decade later, Taiwan Semiconductor has carved out a unique niche fs a chip supplier for almost all of Silicon Valley.
While the company is still based in Taiwan, it is working hard to establish a manufacturing presence on U.S. soil.
TSMC recently completed a 3.5-million-square-foot fabrication facility, referred to in the industry as a ‘fab,’ in Phoenix, Arizona. It is described as the “most advanced chip fab” in the country” and is currently in a pilot program, producing the sample wafers used in semiconductors and sending them to customers.
That works out well for Apple, which has promised to be the company’s biggest customer at the new Arizona fab facility. CEO Tim Cook recently posted on X about Apple’s relationship with Taiwan Semiconductor, expressing enthusiasm that his company will soon be using chips made in the U.S.
Apple silicon unlocks a new level of performance for our users. And soon, many of these chips can be stamped “Made in America.” The opening of TSMC’s plant in Arizona marks a new era of advanced manufacturing in the U.S. — and we are proud to become the site’s largest customer. pic.twitter.com/rBoiEUwZaX
— Tim Cook (@tim_cook) December 6, 2022
TSMC has big plans for the U.S. plant, including investing $65 million to build two more fabs on-site by 2030. Rick Cassidy, president and CEO of TSMC Arizona, stated that the company is “dang near back on the original schedule” as it eyes a future with a higher production capacity.
This is seemingly good news for the companies that buy its chips, a group that includes not just Apple but several other prominent tech sector leaders, including Nvidia and Advanced Micro Devices (AMD) . Now, its growing presence in the U.S. will likely help it expand its customer base even further as demand for its chips continues to grow.
Daniel Newman, CEO of The Futurum Group, recently discussed this with CNBC, stating, “We’ve seen TSMC be able to kind of name its price, and everyone’s going to pay it because right now it’s the dependability and the quality that is needed.
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TSMC’s opportunity ahead in the chip space
Taiwan Semiconductor’s status as a chip maker upon which big tech companies depend has helped spur significant share price growth. TSMC stock has risen 96% over the past year, outpacing Apple and many other Magnificent 7 stocks, including Tesla (TSLA) and Microsoft (MSFT) .
Alexander Wah, Founder and Chief Investment Officer of Prince Capital, spoke to TheStreet about TSMC stock and the company’s future prospects. He echoes Newman’s sentiment, noting that few companies are able to set prices like Taiwan Semiconductor.
However, he approaches the stock from a fairly measured perspective. “I think that the stock of TSMC will be impacted based on whether or not it continues to meet the targets it sets internally and projects to investors, which seems to be a consistent ability of theirs.”
Related: Nvidia scales international hiring for critical new tech sector
Wah also notes, “There are a lot of factors currently impacting this market, which we at Prince Capital have learned about while looking at the smaller and mid-sized players in the space. These companies may be where a lot of the outperformance in the semis/hardware space could lie this coming year.”
Chris Versace of TheStreet Pro recently highlighted Taiwan Semiconductor’s strong sales growth, stating that “the company’s combined October and November revenue, which rose 31% year over year, should dampen any questions about AI, data center or smartphone demand.”
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