Apple and Nvidia's trillion-dollar commitment: more rhetoric than reshoring revolution

Apple and Nvidia, the world’s two most valuable companies by market capitalization, pledged over USD1tn towards the US electronics supply chain, presenting themselves as strategic allies in reshoring and industrial sovereignty efforts. However, a closer look reveals these politically symbolic gestures lack the genuine reshoring shifts claimed, posing hidden economic and geopolitical risks.

High-profile promises with limited impact?

Looking beyond the headlines and examining the announcements more closely, we find that these trillion-dollar announcements conflate capital investments with broader operating costs, payroll, and long-term procurement contracts. Some measures also repackage previously disclosed initiatives or reflect projects likely to have moved forward regardless of the political context. It is also worth remembering that neither Apple nor Nvidia directly operates significant manufacturing facilities, meaning the actual investments will be executed primarily by their contractors and suppliers.

Political signaling rather than industrial transformation

The pledges reflect strategic positioning designed to gain favorable terms from the Trump Administration, particularly regarding:
 Preserving the CHIPS and Science Act, crucial for funding and tax incentives benefiting Apple and Nvidia indirectly by strengthening domestic semiconductor manufacturing.
 Reducing potential exposure to a proposed 25% import tariff on semiconductors, bearing in mind Taiwanese-made semiconductors are essential to Nvidia’s AI chip offerings.
 Rolling back expanded export restrictions on advanced US semiconductors that currently limit market access and risk accelerating rival Chinese-aligned AI ecosystems.

Geopolitical gamble could backfire on US tech giants

While seemingly low-risk due to their non-binding nature, these commitments may have serious geopolitical implications. Semiconductor manufacturing requires stability and long-term policy clarity rather than political symbolism. By aligning publicly with the Trump Administration’s reshoring rhetoric, Apple and Nvidia risk backlash from international partners. Given that most of their revenue comes from global markets, potential retaliation—such as recent Chinese investigations into Nvidia and Intel for anticompetitive practices—could significantly harm their market positions.

Behind the reshoring headlines: deep structural challenges remain

These announcements overshadow persistent underlying challenges in US semiconductor manufacturing. Experiences from Samsung and TSMC, which invested over USD 30 billion in new US facilities, underscore hurdles including skilled labor shortages, weaknesses in the domestic supplier ecosystem, and high reliance on imported machinery and experts. TSMC’s Arizona facility opened a year late and faces operating costs 30-50% higher than Taiwanese plants. Samsung’s Texas facility similarly faces delays. Restrictive immigration policies, uncertain trade dynamics, and constrained educational frameworks under the Trump Administration offer little support for resolving these systemic issues.

A risky bet: neglecting legacy chips and over-investing in AI

Current reshoring efforts overwhelmingly prioritize advanced AI-related chips, driven by demand from a few large firms including Meta, Microsoft, Amazon, and Alphabet. While these investments support immediate AI infrastructure needs, the narrow focus ignores vulnerabilities exposed during the 2021–2022 chip shortage. Legacy chips—low-cost, essential components for automotive and industrial sectors—comprise approximately 70% of global semiconductor volumes but remain largely absent from reshoring strategies. China’s growing dominance in legacy chip manufacturing (40% globally vs. just 7% in the US) increases strategic risks. Simultaneously, a plateau or shift in AI-related demand could rapidly render recently built AI-focused facilities underutilized, transforming ambitious investments into costly excess capacity.

Reshoring rhetoric masks deeper questions about US semiconductor decline

Amid reshoring enthusiasm, fundamental questions remain unaddressed: Why did US semiconductor manufacturing lose its competitive edge, and why does it now require significant public subsidies to recover? The industry's decline partly originated from strategic choices by major US firms like Apple, Nvidia, and Google, which embraced global efficiency—sourcing from Asia and Europe, manufacturing in Asia-Pacific and Mexico, and profiting globally. Ironically, these companies now stand poised to benefit from reshoring incentives despite never heavily depending on domestic production. The reshoring agenda risks undermining vital international partnerships on which these firms' global success continues to depend.

The information provided by KomuniK