Apple and Intel Reportedly Strike Preliminary Deal for Chip Manufacturing, Boosting Intel Stock

Recent reports, citing The Wall Street Journal, indicate Apple and Intel have reached a preliminary agreement for Intel to manufacture future Apple chips.

This partnership allows Apple to diversify its supply chain beyond TSMC amid high demand, while providing a major validation for Intel's growing foundry business.

The deal reportedly targets production of Apple's M7 chip on Intel's 18A process by 2027 and a future iPhone chip on the 14A process by 2028.

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Recent reports suggest a landmark partnership is forming between Apple and Intel for chip manufacturing.

According to news sourced from The Wall Street Journal, Apple and Intel have reached a preliminary deal. This means Intel, a long-time chip designer, could soon start making some of Apple's most advanced chips through its manufacturing arm, Intel Foundry. The news caused Intel's stock to jump significantly, showing that investors believe this partnership is a real and valuable possibility.

So, why is this happening? For Apple, this move is all about strategy and risk management.

First, Apple currently relies almost exclusively on one company, TSMC in Taiwan, for its most advanced chips. TSMC's production lines are reportedly booked solid for years to come. By adding Intel as a second supplier, a strategy known as 'dual-sourcing', Apple can secure its chip supply, avoid potential delays, and gain more negotiating power.

Second, there's a strong push from the U.S. government to bring chip manufacturing back to American soil. Policies like the CHIPS Act provide financial incentives for companies like Intel to build advanced factories in the U.S. Partnering with Intel helps Apple align with this 'onshoring' trend and reduce its geographic dependence on Asia.

For Intel, this is a monumental win. The company has been working hard to build its foundry business, where it makes chips for other companies. Landing Apple, a company famous for its demanding standards, would be the ultimate validation of its technology. It would prove that Intel's new manufacturing processes, like the upcoming 18A and 14A nodes, are truly world-class.

This potential partnership is a win-win. Apple secures its supply chain for the future, and Intel gets the flagship customer it needs to supercharge its foundry ambitions.

Foundry: A company that manufactures semiconductor chips designed by other companies (known as 'fabless' companies). Intel is expanding its foundry services to compete with leaders like TSMC.
Process Node (e.g., 18A, 14A): A term for a specific generation of chip manufacturing technology. A smaller number generally indicates a more advanced process, allowing for smaller, faster, and more power-efficient chips.
Dual-sourcing: A supply chain strategy where a company uses two different suppliers for the same component. This reduces the risk of disruption if one supplier has problems and can lead to more competitive pricing.