A new Arizona fab will provide chip packaging services for Apple chips

In context: Because Taiwan/China relations are shaky, the Biden administration plans to spend billions of dollars to build chip-making facilities in the US to alleviate foreign dependence. The goal is still far off, but new companies are joining major industry players like Apple to help secure the US chip supply chain.

Apple and Amkor have announced an "expanded partnership" to return another piece of the complex chip manufacturing puzzle to the US. The Arizona-based company will build a new advanced chip packaging facility in Peoria. The plan is to construct the facility near TSMC's plant, making the completion of Apple silicon products more efficient.

Amkor will invest $2 billion to build the new Peoria facility, creating approximately 2,000 new jobs. The company plans to have the chip packaging and testing venture "ready for production" within two to three years, with Apple as its biggest customer.

Amkor has packaged chips extensively for Apple for over a decade. Both companies would like to bring more manufacturing jobs back to the US. The Cupertino tech giant plans to invest $430 billion in the US economy over the next five years.

Amkor's new facility should help alleviate the main issue with TSMC's proposed Arizona manufacturing plant. The Taiwanese foundry plans to spend billions of dollars to manufacture chips in the US, but it won't fund an additional facility to handle packaging. The Arizona factory would then be a "paperweight," as chips made in the US will still need to be shipped to Taiwan for final assembly and testing.

Amkor Technology provides a chip packaging service in different global regions, with approximately 31,000 employees worldwide and $7.1 billion in sales. However, the company will spend minimal funds to build the new Peoria fab, thanks to the recently approved CHIPS Act legislation.

The Federal government authorized up to $200 billion in subsidies for chipmaking facilities built in the US. Amkor and TSMC, along with Intel and other smaller chip companies, have already asked to become part of the CHIPS Act's massive funding program.