Apple will invest large sums of money in Germany, more than 1 billion euros over three years. The goal is to accelerate on 5G, semiconductors but also future technologies. The Cupertino firm has announced a new investment in Germany, including the construction of a new campus in the center of Munich, which will open its doors in late 2022. The goal for Apple is to make the secret capital of Germany its European center of the design of electronic chips. This is a good announcement for our neighbors across the Rhine and also for Europe. Indeed, there is currently a big battle going on between Asia, Europe, and the United States over semiconductors. And this massive investment will also create hundreds of jobs in the city. If Apple chose Munich, it’s because the firm is already established there, having taken its first steps just 40 years ago, as Les Echos recalls. And the teams in place are mainly composed of engineers. In addition, many other companies, technological or not, are already on-site, including IBM, Microsoft, and BMW.
Obsession with differentiating from the competition
This investment is part of Apple’s vertical integration strategy, which consists of controlling the key chips of all its products. With each new generation of iPhone or iPad, Apple increases the use of custom circuits developed in-house but manufactured by subcontractors such as the Taiwanese TSMC. This is a response to the company’s obsession with differentiating itself from the competition with chips that offer better performance, functionality and energy efficiency than the standard components used by most competitors. The latest in-house component is the M1 processor in the new Macbooks, replacing Intel’s processors. The next step is to move to an in-house 5G modem.
This strategy started in 2010 with the iPhone’s application processor before gradually expanding to other key components such as the memory controller, motion processor, some power management circuitry, the UWB wireless broadband location circuitry or the M1 processor in Macbooks. According to Gartner, Apple will be the 13th largest semiconductor company in the world in 2020, with a business in this field valued at 9.4 billion dollars. A weight comparable to historical chip players such as AMD ($ 9.3 billion), STMicroelectronics ($ 9.9 billion), Infineon Technologies ($ 10.1 billion) or Nvidia ($ 10.1 billion).
By strengthening its Munich chip design center, Apple also intends to strengthen its ties with its major European semiconductor suppliers such as Germany’s Infineon Technologies, Austria’s AMS, the Netherlands’ NXP and France’s STMicroelectronics. This is because it has the particularity of buying components, not standard, but rather customized with higher added value, developed jointly with these suppliers.
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