Intel Shares Surge 14% on Reported Apple Chip Production Deal

Quick Facts

• Intel shares jumped 14% Friday after reports of preliminary chip production agreement with Apple
• Deal would diversify Apple’s manufacturing base beyond Taiwan Semiconductor Manufacturing Co.
• U.S. government, now Intel’s largest shareholder, played key role in bringing companies together

Intel shares soared nearly 14% Friday following reports that Apple and Intel reached a preliminary agreement for Intel to manufacture chips for Apple devices. The deal represents a potential shift in the semiconductor landscape as Apple seeks to reduce its dependence on Taiwan Semiconductor Manufacturing Co.

Apple shares gained 2% on the news. Intel stock has climbed more than 200% this year and over 330% since the U.S. government took a 10% stake in the company last August, investing $8.9 billion.

The government’s Intel investment has generated massive returns. Intel shares hit an all-time high of around $129, giving the government a gain of $47.6 billion in less than eight months on its $8.9 billion investment made at $20.47 per share.

Government Role in Deal

The U.S. government played a major role in bringing Apple to the negotiating table, according to reports. President Trump personally advocated for Intel to Apple CEO Tim Cook in a White House meeting. Commerce Secretary Howard Lutnick met repeatedly with Cook and other tech executives to convince them to partner with Intel.

“As soon as we went in, Apple went in, Nvidia went in, a lot of smart people went in,” Trump said in January, referring to the government’s backing of Intel attracting other partners.

Strategic Implications

For Apple, the deal would help diversify manufacturing capacity as the company faces supply constraints. Cook said on Apple’s recent earnings call that iPhone sales were limited by supply constraints at contract manufacturers. Mac Mini and Mac Studio models may take several months to reach supply-demand balance.

Apple currently relies solely on TSMC for its most advanced chips. But TSMC’s capacity is stretched amid soaring demand for AI chips from companies like Nvidia and AMD.

For Intel, landing Apple as a customer would provide steady demand for its struggling foundry business. Intel Foundry lost $13.4 billion in 2024 with revenue declining 7% to $17.5 billion. The company has faced delays and low yields that cast doubt on its ability to manufacture chips for others.

Production Timeline

Intel operates a new fabrication plant in Chandler, Arizona, producing chips on its most advanced 18A node designed to rival TSMC’s 2nm process. Chip analyst Ben Bajarin of Creative Strategies said Apple will likely wait for Intel’s next-generation 18A-P node or the 14A process expected to launch by mid-2028.

“Intel is the only place that can scale up capacity as a viable second source,” Bajarin said. “I 100% believe this is going to happen.”

TSMC maintains 64.9% market share in the foundry industry as of Q3 2024. Advanced process technologies at 7nm and below account for 74% of TSMC’s wafer revenue, highlighting the competitive challenge Intel faces.

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