Apple and Intel are reportedly closing in on a deal that will see Intel make more chips for the iPhone maker’s devices, marking a major shift in the chipmaking landscape.
Talks between the two companies have been going on for more than a year, with the first agreement reached in recent months, the Wall Street Journal reported Friday, citing people familiar with the matter.
Intel shares rose nearly 14% on Friday. Apple shares added 2%. Both companies declined to comment.
“I 100% believe this will happen. I just don’t know when,” chip analyst Ben Bajarin of Creative Strategies said in an interview.
If it goes through, the deal would be the most significant vote of confidence yet in Intel’s once-struggling chip foundry business. Intel shares are up more than 200% this year.
For Apple, it will be the end of an era. The iPhone maker currently relies solely on Taiwan Semiconductor Manufacturing Co. making all the chips more advanced in its devices.
But TSMC’s wafer capacity can only go so far, amid growing demand for AI chips that has sent every major tech company into a semiconductor frenzy. Apple is the same, increasing its in-house silicon program in recent years to make almost all the chips in iPhones, Macs and more. Apple is TSMC’s second-largest customer, second only to Nvidia, according to Bajarin.
“Intel is the only place that can increase capacity as a second active source,” Bajarin said.
Intel is ramping up capacity rapidly, with a new chip manufacturing plant now in high volume production in Chandler, Arizona. It makes chips there at 18A, its most advanced node, or manufacturing process, which aims to compete with TSMC’s 2nm node that is currently produced only in Taiwan. TSMC also has several chip factories in Arizona, where Apple has committed to making some of its silicon.
Bajarin said Apple may be waiting to make chips on Intel’s next platform, called 18A-P, which could grow faster next year. He called Intel’s current 18A node “a little ugly” and said the 18A-P “cleans up a lot of things.”
For years, Intel’s established business has faced delays and low yields that cast doubt on its ability to make chips for others. Currently, Intel remains the only major customer for its core business, which makes central processing units and other chips for its devices.
Bajarin said those days are over.
“They have gone through a tough time and now they can be considered as a credible second source,” he said.
The only other commitment to Intel’s large foundry customers will likely not see real results until 2029 or beyond.
Elon Musk said last month that he plans to rely on the Intel 14A chip node of the future at his $119 billion Terafab planned for Austin, Texas, which is intended to make chips for Tesla, SpaceX and SpaceXAI. Intel CEO Lip-Bu Tan said in February that the 14A would be in volume production by 2029.
Intel already has big customers — such as Amazon and Cisco — on the advanced packaging side of its chipmaking business, where individual chip dies and memory are assembled together to make things like a graphics processing unit.
The Apple-Intel deal won’t affect TSMC because “they’re already printing wafers very quickly,” Bajarin said. However, TSMC changed its tone last month when President and CEO CC Wei called Intel “a formidable competitor.”
“If you’re going to have one of your biggest customers potentially sign a deal with a competitor, that might be something you say to soften the blow,” Bajarin said.
Apple executives reportedly visited Samsung’s new chip manufacturing plant under construction in Texas, which CNBC first spotted. Samsung, Intel and TSMC are the only three companies in the world capable of making the most advanced chips needed for AI, and “no one can build fast enough,” Bajarin said.
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