Apple's buying U.S. chips would help reduce geopolitical risk in Asia - CNBC

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Apple 's (AAPL) apparent plans to start getting some chips for its devices made on U.S. soil is a strategic decision that should help the iPhone maker insulate itself from brewing geopolitical risks in Asia. The news Club holding Apple intends to use an Arizona manufacturing plant — set to come online in 2024 — for a portion of its processors, according to a Bloomberg report Tuesday. All of Apple's chips are currently made in Taiwan. The move comes amid growing concern over supply chain concentration in Taiwan, given China's increasingly aggressive posture t oward the democratically self-ruled island that Beijing claims as its own. Those tensions have contributed to worsening U.S.-China relations in recent months, creating new risks for U.S. companies that do business in the region. "We've already made a decision to be buying out of a plant in Arizona, and this plant in Arizona starts up in '24, so we've got about two years ahead of us on that one, maybe a little less," Apple CEO Tim Cook reportedly said. Apple designs its own semiconductors for iPads, iPhones and Macs, but those chips are produced by Taiwan Semiconductor Manufacturing Company (TSM). The chipmaker, known colloquially as TSMC, is what's known as a pure-play foundry , meaning it makes chips on behalf of other firms like Apple and fellow Club holdings Qualcomm (QCOM), Advanced Micro Devices (AMD) and Nvidia (NVDA). Most of TSMC's foundries are located in Taiwan, but it's building a $12 billion facility in Arizona that's scheduled to be operational in 2024 , with potential plans for a second fabrication plant in the state. The Club take We welcome news that Apple is reportedly planning to further diversify its supply chain by purchasing chips made in the U.S., which appears to be part of a larger strategy shift. The development follows reports earlier this year that the company moved some iPad production to Vietnam from China and, more recently, started to make the iPhone 14 in India for the first time. Apple has called out "political events, trade and other international disputes" as a risk to its business, while also noting its heavy reliance on suppliers and contract manufacturers across Asia, according to the company's most recent annual report. This supply chain diversification that we're seeing is not necessarily a reason to buy or sell Apple shares, but it does suggest the company's leadership team is proactively managing geopolitical risk, which we find encouraging. (Jim Cramer's Charitable Trust is long AAPL, QCOM, NVDA, AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Customers walk past an Apple logo inside of an Apple store at Grand Central Station in New York.

Lucas Jackson | Reuters

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Apple's buying U.S. chips would help reduce geopolitical risk in Asia - CNBC

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