President Donald Trump announced on Truth Social that Apple has agreed to work with Intel to design and build chips in America. The news led to a notable jump in Intel's stock, which surged 9% in pre-market trading and 5.7% overnight. This announcement comes after earlier reports of discussions between the two companies regarding potential chip manufacturing.
The specifics of the agreement, such as the types of chips, volume, timeline, or financial terms, remain unclear. However, analysts suggest that any initial deal is likely to involve less bleeding-edge parts, with Intel potentially manufacturing older generation chips for Apple's lower-end or previous-generation products. This arrangement would benefit Apple by diversifying its supply chain, which currently relies heavily on TSMC, and by enhancing its "made-in-America" production efforts.
For Intel, the partnership is a significant win, bolstering its ambitions to revive its manufacturing business and compete with TSMC, the leader in advanced chip production. The company's stock has already seen a substantial rally this year, surging over 200% and reaching a market valuation of over $600 billion, partly due to government backing and these high-profile talks. The US government holds a 10% stake in Intel, acquired last year, and has committed approximately $10 billion to support the expansion of Intel's manufacturing facilities in the US. This deal could potentially double Intel's current annual revenue run rate of approximately $53 billion, transforming its foundry unit into a profitable business.
