Intel's shares rose by 9% in pre-market trading and 5.7% overnight after former President Donald Trump stated on Truth Social that Apple had agreed to work with Intel to design and build chips in the United States. This announcement, though lacking specific details from either Apple or Intel, confirms earlier rumors and a May Wall Street Journal report of a preliminary deal between the two tech giants. Apple's stock saw a smaller gain of 0.6%, highlighting the greater significance of this development for Intel.
This potential partnership is a win for Intel's ambitious manufacturing revival, aiming to compete with leading chipmaker TSMC and secure major external customers for its foundry services. While Intel's cost per chip is currently about three times that of TSMC and its yields lag, the company's stock has tripled this year due to government backing and these high-profile talks. Analysts note that Intel's 18A-P process, now in "risk production," could be a key proving point, with the company aiming for high yield rates to attract customers.
The announcement is part of a broader push by the U.S. administration to strengthen domestic semiconductor production. Trump highlighted that this deal follows commitments from other tech companies, including Nvidia and projects linked to Elon Musk, to collaborate with Intel. The administration acquired a 10% stake in Intel last year, valued at roughly $10 billion at the time, and committed another $10 billion to support manufacturing facility expansion. This stake has since grown significantly, with the President stating it is now worth approximately $60 billion.
While the specifics of which Apple chips Intel will manufacture, the volume, or financial terms remain unclear, the deal is expected to initially focus on low-end or previous-generation Apple products rather than the latest high-end chips due to TSMC's superior manufacturing capabilities for advanced silicon. However, this partnership provides Apple with supply chain diversification and enhances its "made-in-America" efforts, offering both economic and political benefits. Some estimates suggest an Apple deal could roughly double Intel's current ~$53 billion annual revenue run rate.
