Apple and Intel have reportedly reached a preliminary agreement to collaborate on custom chip design and manufacturing, according to a report by the Wall Street Journal. The deal, if finalized, would mark a significant shift in the semiconductor industry by blurring the traditional lines between fabless chip designers and foundry operators.
Under the proposed arrangement, Apple would gain access to Intel's advanced 3nm process technology for manufacturing its custom chips. In return, Intel would tap into Apple's expertise in system-on-chip (SoC) design. This reciprocal exchange could allow both companies to leverage each other's strengths: Apple's proven ability to design high-performance, power-efficient SoCs for its devices, and Intel's manufacturing capabilities, which have been undergoing a turnaround effort under CEO Pat Gelsinger.
What it means for the industry
The semiconductor landscape has long been divided between fabless companies like Apple, AMD, and Qualcomm, which design chips but rely on third-party foundries like TSMC and Samsung for manufacturing, and integrated device manufacturers (IDMs) like Intel, which both design and fabricate chips. A deal between Apple and Intel would represent a hybrid model: Apple would remain a fabless designer but gain access to Intel's foundry services, while Intel would expand its foundry business by securing a major customer.
For Apple, this could reduce its dependence on TSMC, which currently manufactures the majority of Apple's custom chips, including the A-series and M-series processors. Diversifying manufacturing sources could provide supply chain resilience and potentially better pricing leverage. For Intel, landing Apple as a foundry customer would be a significant validation of its foundry strategy, which has been a key pillar of Gelsinger's turnaround plan.
Tradeoffs
The deal is not without risks. Intel's 3nm process is still in development and has faced delays in the past. Apple would need to ensure that Intel's manufacturing yields and performance meet its stringent standards. Additionally, the collaboration could create tensions with TSMC, which has been Apple's primary foundry partner for years. Apple would likely maintain a multi-sourcing strategy rather than fully switching to Intel.
From Intel's perspective, working with Apple could expose its manufacturing processes to a competitor that designs chips for devices that compete with Intel's own products. However, Intel has been moving toward a more open foundry model, where it manufactures chips for other companies without competing in their markets.
When to use it
This deal is still preliminary and subject to negotiation and regulatory approval. If finalized, it would likely take several years to implement, as both companies would need to adapt their design and manufacturing processes to work together. For now, the report signals a potential realignment in the semiconductor industry, but concrete details remain scarce.
Bottom line
The Apple-Intel chip-making deal, as reported, represents a potential strategic pivot for both companies. Apple gains a second foundry source, while Intel gains a marquee customer for its foundry business. The outcome will depend on execution, but the preliminary agreement already highlights the shifting dynamics in chip manufacturing.