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Apple 'insources' Samsung chip processing to Texas

Apples supply chain management prowess is well-chronicled, but the tech leader could be leading the charge in quite a different logistics adventure. Th...

Freddie Pierce
|Dec 19|magazine5 min read

Apple’s supply chain management prowess is well-chronicled, but the tech leader could be leading the charge in quite a different logistics adventure.

The Cupertino-based company is reportedly outsourcing Samsung A5 processors to the United States, a nation with historically high production costs. Apple’s decision to outsource part of its iPhone and iPad processors to Austin, Texas represents a kind of ‘insourcing’ mentality that’s to this point been uncommon within the electronics industry.

Apple’s production factory is a site to behold, however. The 1.6 million square foot facility cost the company $3.6 billion to furbish. Now, the plant is producing the A5 processor, introduced in Apple’s iPad 2 earlier this year.

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Though some in this space might view Texas’ entry into Apple’s business as foreign, the Lone Star State has long been Silicon Valley’s biggest rival in the U.S. tech industry. With lesser real estate prices, lower taxes and looser business regulations, Texas poses an attractive market for innovators within the electronics industry.

Bringing processor production to the United States emphasizes that point. While we’ve yet to see exactly how this bit of outsourcing innovation will play out, it’s safe to say that Apple’s ability to find new supply chain management techniques has been interesting to watch.

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