Apple silicon

When you think of Apple, founded by Steve Jobs, you think of products that look good, feel good, and are perfect for the task. Apple has always been cautious about its 'look, feel, and work quality'. However, very few people are aware that Apple itself designs the tiny chips that power the iPhone, iPad, and Mac. In fact, Apple was one of the main winners in the semiconductor world in the 'fabless revolution' that took place around the world under the leadership of TSMC.

When the first iPhone came to the market in 2007, Apple used its own iOS software, but many of its important components, including the processor, came from other companies; such as Samsung's main processor, Intel's memory, Wolfson's audio processor, Infineon's mobile modem, CSR's Bluetooth chip, and Skyworks' signal amplifier. The iPhone was undoubtedly a groundbreaking invention, but its real 'heart' (silicon) was not yet fully under Apple's control.

However, this situation began to change quickly. In 2008, Apple bought a small Silicon Valley company called PA Semi, which made low-power processors. This acquisition gave Apple a skilled chip design team. It then began hiring the best chip engineers from around the world and established state-of-the-art research centers in Silicon Valley, Israel, and Germany.

Just two years later, Apple launched its first proprietary chip, the A4, which was used in the iPhone 4 and the first iPad. Although it had to invest a handsome amount of money to build such a complex chip, the results were far-reaching. Apple ensured perfect coordination and complete control of hardware and software. This 'vertical integration' became Apple's source of strength.

By 2011, just four years after the first iPhone, Apple alone accounted for more than 60 percent of the profits in the global smartphone business. Old players like Nokia and BlackBerry fell behind, and the rest struggled to survive in the low-cost market. Later, Apple also started making its own chips for products like AirPods, which further strengthened its entire ecosystem.

Apple doesn’t make its own chips or devices. It relies on a vast global supply chain. Apple’s products are assembled primarily in China, where Taiwanese companies like Foxconn and Wistron employ millions of workers. The coastal cities of Dongguan and Zhengzhou in China are now major electronics manufacturing centers in the world. Although some Apple products are now assembled in Vietnam and India, some Apple products are also assembled.

By 2010, only three companies had the capacity to make the world’s most advanced chips: Taiwan’s TSMC, South Korea’s Samsung, and the US’s GlobalFoundries. Intel, while still the leader in PC chips, did not make chips for other companies. This created a new kind of global supply chain.

Like PCs, smartphones are mostly assembled in China, but their valuable components come from the US, Europe, Japan, and Korea. The difference is that smartphones have many more chips for networking, Wi-Fi, Bluetooth, cameras, motion sensors, audio, batteries, and memory. These chips account for a large portion of the total cost of making a phone. As semiconductor manufacturing technology has improved, a large portion of it has gone to East Asia. For example, Apple's A-series chips are designed in California but manufactured in Taiwan. They are then shipped to China, where they are assembled into the final iPhone.

In the 2010s, TSMC became Apple's most important strategic partner. Apple became completely dependent on TSMC because no other company had the technology or manufacturing capacity to meet Apple's needs. Every iPhone is labeled "Designed by Apple in California. Assembled in China". But the truth is, the most important parts of the iPhone are designed in California, assembled in China, but can only be manufactured in Taiwan.

American design, Taiwanese manufacturing, and Chinese addition - these three have formed the global structure of today's modern semiconductor industry. And Apple stands in a unique role right in the middle of it.

(Adapted and abridged from Chapter 38, "Apple Silicon", of Chris Miller's acclaimed book 'Chip War')

Author: Mahmud Hossain, a BUET graduate, has over three decades of leadership experience in Bangladesh's telecom and ICT sectors. He played a key role in introducing mobile technologies in the country. He now serves as a Commissioner at BTRC, following senior leadership roles in several national and multinational industry-leading companies.