Intel may soon make iPhone chips as Apple reaches preliminary deal: Report

A report suggests that Intel has reached an agreement with Apple to manufacture chips for its devices. Intel, which was once a major partner for the iPhone-maker, could help Apple reduce its reliance on TSMC.

In Short

• Apple has reportedly reached a deal with Intel
• Intel could start manufacturing chips for Apple
• US government reportedly played key role in Apple-Intel talks

Intel will soon start manufacturing chips for Apple devices. A report by the Wall Street Journal says that both companies have completed the primary stage of the deal. Intel was once one of Apple’s biggest partners before the iPhone-maker switched to its in-house Apple Silicon chipsets for its devices. Apple’s latest chips are manufactured by TSMC, but due to the AI boom, TSMC’s advanced production lines are in high demand from companies such as NVIDIA and AMD, which produce advanced chips for AI. The deal will help Apple reduce its reliance on TSMC and diversify its manufacturing base.

The deal is also expected to benefit Intel and the US government, which is one of the largest shareholders in Intel. But more on the US government role in the deal later. For Intel, the partnership could provide continuous demand from Apple, which is one of the world’s largest consumer electronics companies. It is also expected to boost Intel’s reputation and strengthen its manufacturing business, which has fallen behind TSMC.

Intel was once a dominant player in the chip manufacturing business. However, as smartphones became popular, the chipmaker failed to counter Qualcomm — and by extension ARM — in the mobile chip space, opening the door for rivals. The chip maker faced another major blow when AMD began taking PC CPU market share away from the company with its Ryzen processors.

Why did Apple stop using Intel’s chips?

Apple first introduced Intel-powered MacBooks in 2006. By 2010, however, the iPhone-maker had begun designing its own chips, starting with the Apple A4, which debuted with the first iPad and iPhone 4.

Apple later faced manufacturing delays, thermal issues, and performance concerns with Intel chips, and began phasing them out from its devices in 2020. The deal would reunite the two companies years after Apple moved away from Intel-designed processors for its Mac computers and shifted to its own custom silicon.

US government’s role in the negotiations

The US government, which became one of the largest shareholders in Intel when Lip-Bu Tan took over as CEO of the company, has reportedly played a major role in bringing Apple to the negotiation table. The Wall Street Journal report says US Commerce Secretary Howard Lutnick repeatedly met Apple leadership over the last 12 months to convince the company to get back into business with Intel.

“In general, we want to and have been helping Intel,” the official told Reuters, adding that the effort was not because of the equity stake in Intel, but because the company is a major US semiconductor producer.

“We have been trying to drum up business for Intel,” he added.

The partnership between Apple and Intel is also expected to support the Donald Trump administration’s goal of bringing more chip production to the US and strengthening domestic manufacturing.

Meanwhile, Intel is also partnered with NVIDIA and Elon Musk. The company has reportedly signed a $5 billion agreement with NVIDIA to build PC and data centre CPUs, and is also producing chips for Musk’s Terafab project for Tesla, SpaceX and xAI.

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