The majority of chips that were "Designed by Apple in California" are currently only produced in Taiwan.
Since the release of the iPhone, the futures of Taiwanese semiconductor manufacturer TSCM and Apple have become inescapably entwined. The processors that powered each new generation of the iPhone grew more complex and specialized as they sped past the technological limitations of their predecessors, to the point where TSCM is now the only chip manufacturing facility on the planet with the necessary equipment and expertise to actually construct them. Economic historian Chris Miller investigates the growth of processor production as an economically vital good and the potential national security risks that global supply networks may pose to America in his new book, Chip War: The Fight for the World's Most Critical Technology.
The company that benefited the most from the growth of foundries like TSMC was Apple, which most people don't even know designs chips for. But given that Apple was founded by Steve Jobs and has always focused on hardware, it should come as no surprise that the business wants to optimize the silicon inside its products. Steve Jobs had given the interplay between software and hardware a lot of thought from his early days at Apple. Jobs gave a presentation in 1980 in which he posed the question, "What is software?" at a time when his hair was almost shoulder length and his moustache had reached his top lip.
The only explanation he could come up with is that software is evolving too quickly, you don't exactly know what you want yet, or you ran out of time to get it into hardware.
The hardware of the first-generation iPhone, which employed Apple's own iOS operating system but outsourced the design and production of its chips to Samsung, was not able to incorporate all of Jobs' design ideas due to scheduling constraints. The ground-breaking new phone also had numerous additional processors, including an Intel memory chip, a Wolfson audio processor, a German company called Infineon's cellular modem, a CSR Bluetooth chip, a Skyworks signal amplifier, and others. All were created by different businesses.
Jobs started carving his vision for the smartphone into Apple's own silicon processors as he unveiled fresh iterations of the iPhone. A year after the iPhone was introduced, Apple acquired PA Semi, a small Silicon Valley semiconductor design company with experience in energy-efficient computing. Apple soon started hiring some of the greatest chip designers in the business. The A4 application processor, which was used in the new iPad and the iPhone 4, was created by the business and debuted two years later. Because it is expensive to design chips with the complexity of the processors that power smartphones, the majority of low- and midrange smartphone manufacturers purchase pre-made chips from suppliers like Qualcomm.
However, in addition to Silicon Valley, where its newest chips are designed by engineers, Apple has made significant investments in R&D and chip design centres in Israel and Bavaria. Today, Apple not only creates the primary processors for the majority of its devices, but also the supporting chips that power add-ons like AirPods. It is because of this investment in specialized silicon that Apple's products operate so efficiently. Within four years of the iPhone's release, Apple had amassed over 60% of all smartphone sales revenue worldwide, defeating competitors like Nokia and BlackBerry and leaving East Asian smartphone manufacturers to battle in the low-margin market for low-cost phones.
Apple designs ever-increasing amounts of silicon, but unlike Qualcomm and the other semiconductor companies that propelled the mobile revolution, it doesn't actually manufacture any of these chips. The manufacture of Apple's phones, tablets, and other products is well known to be outsourced to several hundred thousand assembly line workers in China, who are in charge of screwing and glueing microscopic bits together. The world's top location for manufacturing electrical products is China's network of assembly plants. The factories that Taiwanese firms like Foxconn and Wistron run for Apple in China are ideally suited for producing phones, PCs, and other electronic devices. Despite being the most effective in the world, the electronics assembly plants in Chinese cities like Dongguan and Zhengzhou are not indispensable.
There are still several hundred million subsistence farmers in the globe who would gladly assemble parts for an iPhone for a dollar per hour. The majority of Foxconn's Apple goods are assembled in China, but some are also produced in Vietnam and India.