Apple Ramps Up U.S. Manufacturing and Chip Sourcing as Tariffs Slice Profits

May 16, 2025 | Cupertino, Calif. – Confronted with a projected $900 million tariff-related cost hit this quarter, Apple Inc. is accelerating efforts to reshuffle its global supply chain—shifting more semiconductor sourcing and assembly back to U.S. soil to insulate itself from volatile trade policy and preserve profit margins ReutersReuters.

Buyback Cuts Signal Caution

In its May 2 earnings report, Apple confirmed it had trimmed its $110 billion stock buyback authorization by $10 billion—a rare pullback that Wall Street saw as a defensive move amid growing uncertainty over tariffs on Chinese imports and looming duty proposals on semiconductors. The reduced repurchase plan underscored the balance Apple must strike between returning cash to shareholders and retaining capital to shore up its supply chain Reuters.

“Having Everything in One Location Had Too Much Risk”

Delivering a stark warning, CEO Tim Cook told analysts that Apple is now “ramping up efforts to shift its supply chain away from China, with sourcing more chips from the U.S. and expanding its footprint in key states like Texas, Arizona, and Oregon” — a move born of hard lessons learned during the Sino-U.S. trade war.

“Having everything in one location had too much risk.”
—Tim Cook, Apple CEO Reuters

Domestic Chip Sourcing on Overdrive

Behind the scenes, Apple has quietly boosted procurement from U.S. semiconductor foundries. Long‐time partner TSMC has accelerated capacity expansions at its Arizona fabs—investments totaling over $40 billion—while smaller suppliers like IQE are exploring moving some wafer production stateside to mitigate future duty shocks Reuters.

Analysts note that U.S.-based chip fabrication carries 5–10 percent higher costs compared with prime Asian sites, but the premium is increasingly seen as a worthwhile insurance policy. “A more domestically anchored chip supply chain will pay dividends if tariffs rise further, and help avoid the stockpiling blitzes that sap working capital,” says Linda Sun, tech hardware analyst at Bernstein.

Assembly Partners and Dual-Sourcing Strategies

On the assembly side, Apple is deepening partnerships with U.S. contract assemblers in addition to its longstanding Foxconn facilities. A recent FDA approval for a new manufacturing line in Texas—geared toward next-generation wearable devices—signals Apple’s intent to broaden its domestic footprint beyond iPhones and iPads. Meanwhile, the company is “dual-sourcing” critical socket and connector components from both Asian and U.S. vendors, reducing its reliance on any single geography Reuters.

Tariffs Tonight, Diversification Tomorrow

The administration’s 26 percent tariff on Chinese semiconductor products, coupled with rumblings of a potential 25 percent levy on all chips under a Section 232 probe, has rattled the global tech sector. U.S. industry groups warn that blanket duties could inflate device prices and crimp consumer demand unless companies can reconfigure their supply lines.

“Apple’s strategy is emblematic of a broader industry pivot: diversify where you source, and insulate your most critical nodes,” notes Gary Shapiro, CEO of the Consumer Technology Association Reuters.

Near-Term Pain, Long-Term Gain

In the short term, these reshoring efforts are anything but cheap. Apple’s tariff hit is expected to trim operating income by nearly 1 percent, offset only partially by a temporary exemption on consumer electronics announced in late April. Yet investors appear willing to bet on Apple’s ability to absorb these costs by leaner operations and premium pricing, especially as the company forecasts low-to-mid single-digit revenue growth for the coming quarter Reuters.

Broader Implications for U.S. Manufacturing

Apple’s push is already reverberating through the broader electronics ecosystem. Suppliers such as Corning, which produces iPhone glass, and Skyworks, maker of radio-frequency chips, have both announced U.S. plant expansions to meet Apple’s demand for domestically sourced inputs. Morgan Stanley estimates that Apple’s reshoring drive could generate $20 billion in incremental domestic investment by 2027.

For U.S. policymakers, the shift lends credence to arguments for targeted incentives rather than across-the-board tariffs. As Tim Cook emphasized, “resilient supply chains are vital to American economic leadership”—a message likely to resonate on Capitol Hill as debate intensifies over future trade measures.

Looking Ahead

As Apple accelerates its domestic sourcing—and as Congress considers subsidies for chip manufacturing and assembly—the tech giant’s blueprint may serve as a roadmap for other multinational firms. With global tensions unlikely to abate soon, building a hardened, diversified supply base could prove the defining strategic advantage of the next decade.