Jhe fate of Apple and Taiwanese semiconductor manufacturer TSCM has been inextricably linked since the advent of the iPhone. As each generation of iPhone exceeded the technological capabilities of its predecessor, the processors that powered them became increasingly complex and specialized – to the point that today TSCM has become the only chipmaker on the planet with the necessary tools and knowledge. how to actually build them. In his new book, Chip War: the fight for the most critical technology in the world, Economic historian Chris Miller examines the rise of processor production as an economically crucial commodity, the national security implications these global supply chains could pose for America.
Extract of Chip War: the fight for the most critical technology in the world by Chris Miller. Reprinted with permission from Scribner. Copyright 2022.
The biggest beneficiary of the rise of foundries like TSMC has been a company that most people don’t even realize is designing chips: Apple. However, the company Steve Jobs built has always specialized in hardware, so it’s no surprise that Apple’s desire to perfect its devices includes controlling the silicon inside. Since his early days at Apple, Steve Jobs had thought deeply about the relationship between software and hardware. In 1980, when his hair almost reached his shoulders and his mustache covered his upper lip, Jobs gave a lecture that asked, “What is software?
“The only thing I can think of,” he replied, “is that software is something that changes too quickly, or you don’t know exactly what you want yet, or you haven’t had the time to integrate it into the material.”
Jobs didn’t have time to put all his ideas into the hardware of the first-generation iPhone, which used Apple’s own iOS operating system, but contracted out the design and production of its chips to Samsung. The revolutionary new phone also had many other chips: an Intel memory chip, an audio processor designed by Wolfson, a modem to connect to the cellular network produced by Germany’s Infineon, a Bluetooth chip designed by CSR and a signal amplifier from Skyworks, among others. All were designed by other companies.
When Jobs introduced new versions of the iPhone, he began etching his vision for the smartphone into Apple’s own silicon chips. A year after the iPhone was launched, Apple bought a small Silicon Valley chip design company called PA Semi, which had expertise in energy-efficient processing. Soon Apple began hiring some of the best chip designers in the industry. Two years later, the company announced that it had designed its own application processor, the A4, which it used in the new iPad and iPhone 4. Designing chips as complex as the processors that run the Smartphones are expensive, which is why most low-end and low-midrange smartphone companies buy off-the-shelf chips from companies like Qualcomm. However, Apple has invested heavily in R&D and chip design facilities in Bavaria and Israel, as well as in Silicon Valley, where engineers design its new chips. Now, Apple designs not only the main processors for most of its devices, but also auxiliary chips that run accessories like AirPods. This investment in specialized silicon explains why Apple products work so well. Four years after the launch of the iPhone, Apple was making more than 60% of all global profits from smartphone sales, crushing rivals like Nokia and BlackBerry and leaving East Asian smartphone makers to compete in the market. low-margin cheap phones.
Like Qualcomm and the other chipmakers that propelled the mobile revolution, while Apple designs more and more silicon, it doesn’t make any of those chips. Apple is well known for outsourcing the assembly of its phones, tablets and other devices to several hundred thousand assembly line workers in China, who screw and glue tiny parts together. China’s assembly facility ecosystem is the best place in the world to manufacture electronics. Taiwanese companies, such as Foxconn and Wistron, which manage these facilities for Apple in China, are the only ones capable of producing phones, PCs and other electronic devices. Although electronics assembly facilities in Chinese cities like Dongguan and Zhengzhou are the most efficient in the world, they are not irreplaceable. The world still has several hundred million subsistence farmers who would happily fix components into an iPhone for a dollar an hour. Foxconn assembles most of its Apple products in China, but it also manufactures in Vietnam and India.
Unlike workers on the assembly line, the chips inside smartphones are very difficult to replace. As transistors have shrunk, they have become increasingly difficult to manufacture. The number of semiconductor companies capable of building advanced chips has declined. In 2010, when Apple launched its first chip, there were only a handful of top foundries: TSMC of Taiwan, Samsung of South Korea and, possibly, GlobalFoundries, depending on whether it succeeded or not to gain market share. Intel, still the world leader in transistor reduction, has remained focused on building its own chips for PCs and servers rather than processors for phones from other companies. Chinese foundries like SMIC were trying to catch up but were years behind.
For this reason, the supply chain for smartphones is very different from that associated with PCs. Smartphones and PCs are both assembled largely in China with high-value components mostly designed in the US, Europe, Japan or Korea. For PCs, most processors come from Intel and are produced at one of the company’s factories in the US, Ireland or Israel. Smartphones are different. They are packed with chips, not only the main processor (designed by Apple itself), but also modem and radio frequency chips for connecting to cellular networks, chips for WiFi and Bluetooth connections, an image sensor for camera, at least two of the memory chips, chips that detect motion (so your phone knows when you put it horizontally), plus semiconductors that handle battery, audio, and wireless charging . These chips make up most of the bill of materials needed to build a smartphone.
As semiconductor manufacturing capacity has migrated to Taiwan and South Korea, so has the ability to produce many of these chips. Application processors, the electronic brain inside every smartphone, are primarily produced in Taiwan and South Korea before being sent to China for final assembly inside the plastic casing and battery. glass screen of a phone. Apple’s iPhone processors are made exclusively in Taiwan. Today, no company other than TSMC has the skills or production capacity to build the chips Apple needs. Thus, the text engraved on the back of each iPhone – “Designed by Apple in California. Assembled in China” – is very misleading. The most irreplaceable components of the iPhone are indeed designed in California and assembled in China. can only be made in Taiwan.
All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you purchase something through one of these links, we may earn an affiliate commission. All prices correct at time of publication.