Apple and Intel are reportedly on the cusp of a groundbreaking agreement that would see Intel manufacture chips for some of Apple’s flagship devices, signaling a significant shake-up in the semiconductor industry’s intricate supply chain. Sources close to the matter indicate that negotiations, which have been ongoing for over a year, have culminated in a preliminary accord reached in recent months.
The prospect of this partnership sent ripples through the market, with Intel’s stock surging nearly 14% and Apple’s shares seeing a modest 2% increase on the news. Both tech giants have declined to comment on the developments.
“I am absolutely convinced this deal will materialize,” stated chip industry analyst Ben Bajarin of Creative Strategies in a recent interview. “The timing remains uncertain, but the direction is clear.”
Should this agreement be finalized, it would represent a monumental endorsement for Intel’s foundry division, an area that has grappled with challenges in recent years. Intel’s stock performance this year, up over 200%, underscores the market’s renewed confidence in its manufacturing capabilities.
For Apple, this would mark the conclusion of an era defined by its exclusive reliance on Taiwan Semiconductor Manufacturing Co. (TSMC) for the production of its most advanced custom-designed silicon. TSMC has been the sole manufacturer of Apple’s sophisticated chips powering iPhones, Macs, and other devices.
However, the insatiable global demand for AI-driven technologies has created unprecedented pressure on wafer capacity. This surge has compelled every major technology firm to aggressively pursue semiconductor solutions, and Apple is no exception. The company has significantly ramped up its in-house silicon development, aiming to design nearly all core components for its product ecosystem. According to Bajarin, Apple is currently TSMC’s second-largest customer, surpassed only by Nvidia.
“Intel stands out as the sole entity capable of scaling production to serve as a viable second manufacturing source,” Bajarin elaborated.
Intel has been making substantial investments in expanding its manufacturing capacity, notably with its state-of-the-art fabrication plant in Chandler, Arizona, now engaged in high-volume production. This facility is utilizing Intel’s most advanced node, 18A, a process designed to compete directly with TSMC’s 2nm node, currently produced exclusively in Taiwan. Concurrently, TSMC is also establishing multiple new fabrication plants in Arizona, a location where Apple has previously committed to having some of its silicon manufactured.
Bajarin suggests that Apple is likely to hold off for chips produced on Intel’s next-generation node, provisionally named 18A-P, which is anticipated to reach production scale as early as next year. He described Intel’s current 18A node as “somewhat unrefined,” with 18A-P expected to address these limitations.
Historically, Intel’s foundry business has been plagued by production delays and suboptimal yields, raising questions about its ability to secure external manufacturing contracts. Until now, Intel’s foundry has primarily served its internal needs, producing central processing units and other components for its own product lines.
“Those challenges are now in the past,” Bajarin affirmed. “They have navigated the difficult period and can now be recognized as a credible alternative manufacturing partner.”
Intel’s other significant external foundry commitment is with Elon Musk’s ambitious “Terafab” project in Austin, Texas, slated for development by 2029 or beyond. This facility is intended to produce chips for Tesla, SpaceX, and SpaceXAI, leveraging Intel’s future 14A chip node. Intel CEO Lip-Bu Tan confirmed in February that the 14A node is projected to enter volume production in 2029.
Furthermore, Intel already boasts established relationships with major clients such as Amazon and Cisco for its advanced packaging solutions. This intricate process involves bonding individual chip dies and memory modules to create complex components like graphics processing units.
Despite the potential Apple-Intel deal, industry observers anticipate minimal impact on TSMC’s operations. “They are already operating at maximum wafer output,” Bajarin noted. However, TSMC’s leadership has recently acknowledged Intel as a “formidable competitor.” Bajarin interprets this as a strategic move to manage market perceptions, especially when a major customer is considering a deal with a rival foundry.
Rumors also suggest that Apple executives have explored Samsung’s nascent chip manufacturing facilities in Texas, a site that CNBC has previously had exclusive access to. Samsung, alongside Intel and TSMC, represents the elite tier of global foundries capable of producing the highly advanced chips essential for AI. As Bajarin succinctly put it, “No one can build fast enough” to meet the escalating demand.
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