Apple Lobbies for Lower Taxes to Boost US Chip Production

Apple has been lobbying the US government on tax breaks to support domestic chip production, suggesting the iPhone maker is keen to move more of its supply chain to the US.

In second- and third-quarter disclosure reports, the company said it lobbied officials from the Treasury Department, Congress and the White House on tax topics including “issues related to tax credits for domestic semiconductor production.”

Since releasing its first custom processor in 2010, chips have become a major performance differentiator for Apple. The company designs some of these components in house, but outsources production to Taiwan Semiconductor Manufacturing. Many other parts for Apple devices are made in China. That has exposed the company to import tariffs and other risks from a trade war between the US and China. Taiwan, where TSMC operates, has also become an increasing focus of geopolitical tension between China and the US.

Apple's recent lobbying coincides with a push by the company and its partners to move some production away from China and even back to the US in a few cases. There's also a broader effort by the US semiconductor industry to get government support for increased domestic production.

Apple's US lobbying efforts are now mostly led by company veteran Tim Powderly, who was promoted around the time Cynthia Hogan, Apple's prior top US lobbyist, left to join former vice president Joe Biden's campaign. An Apple spokesman declined to comment.

Earlier this year, TSMC said it would build a $12 billion (roughly Rs. 88,268 crores) chip plant in Arizona, and the company has been lobbying officials there for tax breaks.

In 2013, Apple started making a low-volume Mac Pro computer in the US Last year, it started using the same plant in Texas to conduct final assembly for a new version. That decision came after the company was granted breaks on tariffs.

Apple also sources components from several chipmakers that build some of their products in the US, including Broadcom and Texas Instruments. Apple also has started using Qualcomm again for iPhone modems, and the San Diego, California-based chipmaker builds some products domestically via production partner Global Foundries.

Intel, the current maker of the Mac's main processors, builds some of its chips in the US. However, when Apple moves to its own Mac chips next month, that will mean shifting production of that component to Taiwan.

-With assistance from Ian King and Ben Brody

© 2020 Bloomberg L.P.

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