I admit I have little knowledge in this area, so pardon my stupid question...
Why doesn't Apple just make their own chips? They couldn't even set up shop in another country to avoid paying a fair American wage, couldn't they?
Making their own chips is expensive and hard. Owning a chip manufacturing plant isn't about propping up a building in China and getting cheap unskilled workers and then cranking out chips. In fact, Samsung's fab is in Austin instead of China isn't because they're trying to bring jobs to the US. It's because unskilled workers can't run a chip fab.
It takes billions of dollars of equipment, which then needs to be continually updated for billions of dollars. The workers are highly specialized and educated. Even doing a test run of a chip costs half a million dollars if you know what you're doing. (
http://en.wikipedia.org/wiki/Semiconductor_fabrication_plant)
"IC production facilities are expensive to build and maintain. Unless they can be kept at nearly full utilization, they will become a drain on the finances of the company that owns them. The foundry model uses two methods to avoid these costs: Fabless companies avoid costs by not owning such facilities. Merchant foundries, on the other hand, find work from the worldwide pool of fabless companies, and by careful scheduling, pricing, and contracting keep their plants at full utilization." (
http://en.wikipedia.org/wiki/Foundry_model)
When it comes to chips, there's a clear split between chip design and chip fabrication. Many companies design their own chips and send them off to foundries to get them manufactured. Even well known brands such as AMD, nVidia, etc.
Few companies have their own manufacturing capabilities. Intel, Samsung, and IBM come to mind. AMD used to, and they spun them off as GlobalFoundries.
In the wikipedia entry, you might want to check out how big of a difference TSMC's revenue is compared to Samsung's foundries are.
It'd be an awful decision for Apple to build their own fab.