Intel shares have surged following reports of a preliminary agreement with Apple for chip manufacturing, marking a significant validation for Intel’s previously struggling foundry business. This potential deal signifies a major strategic pivot for Apple, moving beyond its sole reliance on Taiwan Semiconductor Manufacturing Co. (TSMC) amidst increasing demand for advanced AI chips and capacity constraints across the industry. The collaboration is seen as crucial for Intel to scale its advanced chip production and for Apple to diversify its supply chain.
Key Points
- Reports indicate a preliminary agreement for Intel to manufacture some chips for Apple devices.
- This deal would be a substantial boost for Intel's chip foundry, validating its turnaround efforts.
- Apple currently relies exclusively on Taiwan Semiconductor Manufacturing Co. (TSMC) for its most advanced chips.
Apple and Intel are reportedly on the cusp of finalizing a landmark agreement that would see Intel produce a portion of the advanced chips for Apple's array of devices. This development heralds a profound transformation in the fiercely competitive global chipmaking sector.
Discussions between these two technology giants have been ongoing for over a year, culminating in a preliminary accord reached in recent months, as reported by The Wall Street Journal on Friday, citing informed sources.
The news sent Intel's shares soaring by nearly 14% on Friday, reflecting immense investor confidence. Apple's stock also saw a modest gain of 2%. Both companies refrained from commenting on the reports.
Ben Bajarin, a respected chip analyst at Creative Strategies, expressed strong conviction in the deal's eventual completion, stating, "I 100% believe this is going to happen. I don't know when."
Should this agreement materialize, it would represent the most significant endorsement yet for Intel's chip foundry operations, a segment that has grappled with challenges in the past. Intel's stock has already witnessed an impressive surge of over 200% this year, underscoring its rejuvenated market perception.
For Apple, this move marks a pivotal shift away from its long-standing exclusive relationship with Taiwan Semiconductor Manufacturing Co. (TSMC), which currently manufactures all the advanced chips powering Apple's devices.
The increasing global demand for AI chips has strained TSMC's wafer capacity, pushing major tech players into an intense race for semiconductor supply. Apple, too, has significantly ramped up its in-house silicon program, aiming to produce most core chips for its iPhones, Macs, and other products internally. According to Bajarin, Apple stands as TSMC's second-largest client, trailing only Nvidia.
Bajarin emphasized Intel's unique position, noting, "Intel is the only place that can scale up capacity as a viable second source."
Indeed, Intel is aggressively expanding its manufacturing capabilities. A new, state-of-the-art chip fabrication plant in Chandler, Arizona, has commenced high-volume production. This facility is producing chips on Intel's 18A, its most advanced node, designed to compete directly with TSMC's 2nm node, currently exclusively produced in Taiwan. Coincidentally, TSMC is also establishing multiple new chip fabs in Arizona, where Apple has previously committed to manufacturing some of its silicon.
While Apple has explored options with TSMC's Arizona fabs, Bajarin believes Apple is more likely to wait for Intel's subsequent node, 18A-P, which could be ready for scaling as early as next year. He described Intel's current 18A node as "a little bit rough" and suggested 18A-P "cleans a lot of stuff up."
For years, Intel's foundry business was plagued by production delays and low yields, casting doubts on its ability to serve external clients. Historically, Intel has been its own primary customer, producing CPUs and other chips for its devices.
Bajarin, however, asserts that those challenging times are now behind Intel. "They've got through the rough patch and can now be considered validated as a credible second source," he stated.
Beyond Apple, Intel's only other major external foundry commitment is not expected to yield substantial results until 2029 or later.
Elon Musk recently announced plans to utilize Intel's forthcoming 14A chip node at his colossal $119 billion Terafab project in Austin, Texas, intended for chips powering Tesla, SpaceX, and SpaceXAI. Industry reports align with volume production for 14A around 2029.
In its advanced packaging business, Intel already boasts significant external clients, including Amazon and Cisco. This segment involves bonding individual chip dies and memory to create sophisticated components like graphics processing units.
According to Bajarin, an Apple-Intel deal would not adversely impact TSMC, as "they're already printing wafers as fast as they can." Nonetheless, TSMC's President and CEO C.C. Wei notably shifted his rhetoric last month, acknowledging Intel as a "formidable competitor."
Bajarin speculated on this change: "If you're about to have one of your largest customers probably sign a deal with a competing foundry, that would be the kind of thing you say to perhaps soften the blow."
Apple executives have also reportedly toured Samsung's new chip manufacturing plant under construction in Texas, which CNBC previously featured. Samsung, along with Intel and TSMC, forms an elite trio capable of producing the cutting-edge chips essential for AI advancements, and as Bajarin aptly summarized, "nobody can build fast enough."
The article also included several video segments, such as:
- How Samsung became the world's second biggest advanced chipmaker
- Intel reaches preliminary agreement to make Apple chips (Video thumbnail: 
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- Can Intel’s New Arizona Chip Fab Bring It Back From The Brink? (Video thumbnail: 
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- How Apple is trying control all core iPhone chips and prioritize AI (Video thumbnail: 
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