Intel shares fly on Apple chip deal report. Here’s why it’s a big deal
Apple and Intel have reportedly reached a deal that will see Intel produce some chips for the iPhone maker’s devices; This indicates a major change in the field of chip making.
Talks between the two companies have been going on for more than a year and a preliminary agreement was reached in recent months. Wall Street Magazine he reported Friday, quoting people familiar with the matter.
Intel shares rose nearly 14% on Friday. Apple shares gained 2%. Both companies declined to comment.
“I believe 100% it will happen. I don’t know when,” chip analyst Ben Bajarin of Creative Strategies said in an interview.
If it pans out, the deal would be the most notable vote of confidence yet for Intel’s once-struggling chip foundry. Intel shares are up more than 200% this year.
For Apple, this would be the end of the era. The iPhone maker currently relies solely on Taiwan Semiconductor Manufacturing Company to produce all of the most advanced chips for its devices.
But TSMC’s wafer capacity can only go so far amid surging demand for AI chips that has dragged all major tech companies into a semiconductor frenzy. Apple is no exception; It has been ramping up its in-house silicon program in recent years, producing nearly all the core chips in iPhones, Macs and more. According to Bajarin, Apple is TSMC’s second largest customer, followed only by Nvidia.
“Intel is the only place that can increase capacity as a viable second source,” Bajarin said.
Intel is indeed ramping up capacity, with its new chip manufacturing facility in Chandler, Arizona, moving into high-volume production. There it produces chips at 18A, TSMC’s most advanced node to rival the 2nm node currently produced only in Taiwan. TSMC also has several new chip factories in Arizona, where it has committed to producing some of Apple’s silicon.
Apple will likely wait to produce chips on Intel’s next node, called 18A-P, which could scale next year, Bajarin said. He called Intel’s current 18A node “a little crude” and said the 18A-P “cleans up a lot of things.”
For years, Intel’s foundry business has faced delays and low yields that cast doubt on its ability to produce chips for others. For now, Intel remains the only major customer of the foundry business, which produces central processing units and other chips for its own devices.
Bajarin said those days are over.
“They have survived the difficult period and can now be considered verified as a reliable second source,” he said.
Intel’s other major external customer commitment to the foundry is unlikely to see real results until 2029 or later.
Elon Musk said last month that he plans to rely on Intel’s future 14A chip node in his $119 billion Terafab project for Austin, Texas, which aims to produce chips for Tesla, SpaceX and SpaceXAI. Intel CEO Lip Bu Tan said in february It is stated that 14A will enter mass production in 2029.
Intel already has major customers (like Amazon and Cisco) on the advanced packaging side of its chipmaking business; where individual chip dies and memory are connected together to create things like a graphics processing unit.
Bajarin said the Apple-Intel deal won’t affect TSMC because “they’re already printing wafers as quickly as possible.” Yet TSMC shifted its rhetoric last month, with President and CEO CC Wei calling Intel a “formidable competitor.”
“If you want one of your largest customers to possibly sign a deal with a rival foundry, that would probably be the kind of thing you would say to soften the blow,” Bajarin said.
Apple executives too reportedly He visited Samsung’s new chip manufacturing facility under construction in Texas, where CNBC got an early look. Samsung, Intel and TSMC are the only three companies in the world that can produce the most advanced chips needed for artificial intelligence, and “no one can produce them fast enough,” Bajarin said.
