Apple and Intel Reach Preliminary Chip-Making Deal in Major Boost for US Semiconductor Manufacturing

NEW YORK — Intel has reached a preliminary deal with Apple to manufacture some of the chips that power the iPhone maker's devices, the Wall Street Journal reported on Friday, marking a major breakthrough in the chipmaker's ambitious bid to revive its struggling manufacturing business. The deal, finalised in recent months after more than a year of intensive negotiations, represents a significant shift in the global semiconductor landscape.

Intel stock surged 15% on the news, while Apple shares rose approximately 1.7% in afternoon trading, reflecting investor optimism about the landmark partnership between the two American technology giants.

Deal Details

According to the Wall Street Journal report, the two companies held intensive talks for over a year before hammering out a formal deal in recent months. The specific Apple products that Intel would manufacture chips for remain unclear, and neither Apple nor Intel has officially commented on the agreement.

• Government Role — The US government, which became Intel's largest shareholder last year under a deal with CEO Lip-Bu Tan, played a major role in bringing Apple to the negotiating table
• Manufacturing Diversification — For Apple, the deal means diversifying away from sole reliance on TSMC, which has faced extremely tight capacity constraints
• Supply Constraints — Apple CEO Tim Cook recently said iPhone sales were held back by supply constraints at its contract manufacturer, highlighting the need for alternative suppliers
• Intel's Revival — Landing Apple as a customer provides Intel with steady demand from one of the world's largest consumer electronics companies

Strategic Significance

Landing an Apple contract will give Intel a steady stream of demand from one of the world's largest consumer electronics companies, bolstering both its reputation and a manufacturing business that has fallen behind Taiwan's TSMC in recent years. The deal marks a crucial milestone in CEO Lip-Bu Tan's turnaround strategy for the iconic American chipmaker.

Commerce Secretary Howard Lutnick has met repeatedly over the last year with high-ranking Apple officials, including CEO Tim Cook, SpaceX chief Elon Musk, and Nvidia head Jensen Huang, to convince them to do business with Intel. The US government's active role underscores the strategic importance of rebuilding domestic semiconductor manufacturing capacity.

Industry Context

Intel has spent the last year signing deals with the US government and securing investments from AI chip giant Nvidia and SoftBank amid CEO Lip-Bu Tan's push to turn the chipmaker around. Earlier this week, Bloomberg reported that Apple had held exploratory discussions about using Intel and Samsung to produce main processors for its devices.

Last month, Musk confirmed that Tesla will use Intel's next-generation 14A manufacturing process to make chips at its Terafab project in Austin, Texas. TSMC remains the world's largest contract chipmaker, making advanced wafers for AI firms such as Nvidia and AMD, but swelling demand has made securing chip capacity extremely difficult for many companies.