CHIPS Act First Big Win is the Apple A16

A $52.7 billion bet is about to pay off. TSMC is starting production of Apple’s A16 SoC in Arizona.

About the CHIPS Act

The CHIPS and Science Act, passed in 2022, was a landmark initiative designed to boost the domestic production of semiconductors in the United States. With the global semiconductor supply chain heavily concentrated in East Asia—primarily Taiwan, South Korea, and China—the U.S. government recognized the strategic importance of reshoring advanced semiconductor manufacturing to ensure national security and technological competitiveness.

The CHIPS Act authorized $280 billion in total funding, distributed across various sectors aimed at bolstering the U.S. technological landscape. Of that, $52.7 billion was allocated specifically for semiconductor manufacturing, research, and workforce development, including $39 billion for direct manufacturing incentives. Another $13.7 billion was dedicated to advancing research and development in key areas such as artificial intelligence (AI), quantum computing, and semiconductor innovation. The U.S. Department of Commerce's CHIPS Program Office is responsible for overseeing the deployment of these funds.

Expected Impact of the CHIPS Act

The CHIPS Act is expected to significantly reshape the U.S. semiconductor industry by driving substantial growth in domestic manufacturing capacity and enhancing the resilience of the global supply chain. A joint report by the Semiconductor Industry Association (SIA) and Boston Consulting Group highlights several key projections for the coming decade, underscoring the long-term impact of these investments.

Tripling of U.S. Fab Capacity: The report forecasts a 203% increase in U.S. fab capacity between 2022 and 2032, representing the largest projected growth of any country during this period. This tripling of capacity will be crucial in meeting rising demand for semiconductors in sectors such as AI, telecommunications, and high-performance computing.

Increased Share of Global Capital Expenditures: Between 2024 and 2032, the U.S. is expected to secure 28% of global capital expenditures in semiconductor manufacturing, equating to an estimated $646 billion. This significant increase is second only to Taiwan. In contrast, without the CHIPS Act, the U.S. would have captured only 9% of global capital investment by 2032, underscoring the act’s critical role in revitalizing domestic semiconductor production.

Growth in Global Fab Capacity Share: The U.S. share of global semiconductor fabrication capacity, which has been declining for decades, is set to grow for the first time in years. By 2032, the U.S. is projected to hold 14% of global fab capacity, up from 10% today. Without the CHIPS Act, the U.S. share was forecasted to fall to 8% by that same year, illustrating the act’s importance in reversing this downward trend.

Expansion in Critical Technology Segments: The CHIPS Act will enable the U.S. to enhance its capabilities in critical semiconductor technologies. This includes leading-edge fabrication (sub-10nm processes), DRAM memory, analog chips, and advanced packaging. U.S. capacity for advanced logic chips (those smaller than 10nm) is projected to grow to 28% of global capacity by 2032, positioning the U.S. as a global leader in next-generation semiconductor technologies.

These projections highlight the transformative potential of the CHIPS Act in restoring U.S. leadership in semiconductor manufacturing and ensuring a more resilient and geographically diverse global supply chain.

Major Recipients of CHIPS Act Funding

To achieve the CHIPS Act’s goals, the U.S. government partnered with key semiconductor industry players. Companies such as Intel, Samsung, Micron, and Taiwan Semiconductor Manufacturing Company (TSMC) received substantial portions of the allocated funding. For example:

• Intel: Awarded over $10 billion to expand and construct new fabs in Ohio and Arizona. These fabs will be critical for producing advanced logic chips used in artificial intelligence (AI), defense systems, and high-performance computing.
• Samsung: Expected to receive up to $6.4 billion for its new 4-nanometer fab in Taylor, Texas, scheduled to begin production in 2025. This facility will produce chips primarily for automotive, AI, and consumer electronics sectors.
• Micron Technology: Allocated $1.5 billion to support memory chip production at its planned fab in New York. This investment is part of Micron’s broader plan to invest over $100 billion to strengthen domestic memory chip production over the next two decades.
• TSMC: Received $6.6 billion for the construction of its Arizona facility. This investment is part of TSMC’s $65 billion commitment to building and operating multiple fabs in the U.S., with production focusing on 4nm, 3nm, and 2nm chips by the end of the decade.

These allocations represent an unprecedented investment in the domestic semiconductor ecosystem, aimed at reducing the country's dependence on foreign-made chips and securing a leading position in emerging technologies.

TSMC Arizona and the First CHIPS Act Product: Apple’s A16 SoC

TSMC, the world’s leading semiconductor foundry, plays a crucial role in realizing the goals of the CHIPS Act. Its Arizona fabrication facility—Fab 21—is at the heart of U.S. efforts to produce cutting-edge chips domestically. Phase 1 of Fab 21 has begun manufacturing one of the most advanced chips it’s capable of: Apple’s A16 System-on-Chip (SoC).

Apple’s A16 SoC, originally debuted with the iPhone 14 Pro in 2022, is now being produced in TSMC Arizona using the company’s N4P process technology, an enhanced version of the 5-nanometer (5nm) process node. 

The significance of this production is substantial. It marks the first major CHIPS Act-backed semiconductor product to roll off an American assembly line—Apple’s flagship SoC. Initially, the A16 was produced exclusively at TSMC’s fabs in Taiwan. However, bringing its production to U.S. soil signals a major milestone for both TSMC and Apple, demonstrating the potential of the CHIPS Act to accelerate domestic manufacturing capabilities for the most advanced semiconductor technologies.

Why the Choice of A16 Chip Is Significant

Apple’s decision to manufacture the A16 in Arizona reflects the increasing importance of securing the supply chain for high-performance, advanced-node chips. The A16 SoC is built on a highly intricate architecture, designed to power devices like the iPhone and future iPads, with capabilities optimized for AI, machine learning, and computational photography. These are critical features in today's mobile devices, requiring substantial computational power, energy efficiency, and tight integration between hardware and software.

By producing the A16 SoC domestically, TSMC and Apple ensure greater control over production timelines and reduce the risk of supply chain disruptions—an ongoing issue exacerbated by geopolitical tensions and pandemic-related delays. Additionally, this move strengthens the U.S. semiconductor ecosystem, particularly in the race to lead in the global 5G and AI technology sectors.

TSMC Arizona Roadmap: Beyond the Fab 21

TSMC Arizona’s first phase of Fab 21 is only the beginning. The Arizona site is expected to expand significantly, with TSMC announcing plans for a second fab to produce chips using its 3nm and 2nm process technologies—currently among the most advanced semiconductor manufacturing processes in the world. Production in these fabs is slated to begin in 2028. This second fab will support the development of next-generation semiconductors designed for AI, high-performance computing (HPC), and other demanding applications.

The third fab at TSMC Arizona will take it a step further, aiming to produce chips based on even more advanced processes by the end of the decade, aligning with the continued scaling of semiconductor technology. TSMC’s investment in Arizona is poised to exceed $65 billion when all three fabs are operational, creating a robust foundation for U.S.-based semiconductor manufacturing well into the future.

A Stronger Future

The CHIPS Act represents a pivotal moment for U.S. semiconductor manufacturing, with a $52.7 billion commitment already bearing fruit. The expected tripling of domestic fab capacity, expansion in advanced semiconductor technologies, and partnerships with industry giants like TSMC and Intel highlight the act's transformative power. As we look to the future, the U.S. is on track to reclaim its leadership in the semiconductor space, securing supply chains and driving innovation in critical sectors like AI and telecommunications.