Apple and Intel have reached a preliminary agreement for Intel to manufacture chips for Apple devices, as reported by the Wall Street Journal. Specific product details remain undisclosed, but sources indicate the deal concluded after more than a year of negotiations, marking a significant milestone for Intel's foundry strategy.
Background and Significance
The partnership comes as Intel CEO Lip-Bu Tan pushes forward a revitalization plan. Intel has struggled to catch up with TSMC and Samsung in advanced process nodes, and its foundry business has been a loss leader. Securing Apple as a customer not only brings a premium client but also validates Intel's manufacturing capabilities. Apple, which began transitioning to its own M-series chips in 2020, has primarily relied on TSMC for production. A shift to Intel could signal a diversification strategy.
US Government Role
The deal follows US government encouragement for tech firms to collaborate with Intel to bolster domestic semiconductor production. The government has already provided subsidies via the CHIPS Act and acquired a 10% stake in Intel, underlining efforts to restore American chipmaking dominance. Apple's move is seen as aligning with these policy objectives.
Market Impact and Outlook
Intel's stock rose about 3% in after-hours trading on the news. Analysts believe Apple's orders will help Intel ramp up 18A process node production and narrow the gap with TSMC. However, the agreement is still preliminary, and timelines for mass production are unclear. If successful, Intel's foundry business could break even by 2027, boosting the entire US semiconductor ecosystem.
Moreover, this partnership may influence other chip designers. Intel's foundry customer list already includes Qualcomm and Nvidia; adding Apple significantly enhances foundry ecosystem attractiveness. The global chip foundry landscape could see a major reshuffle in the coming years.