Intel Corporation (INTC) saw its shares jump approximately 14% on Friday, closing at $124.92, following a report from the Wall Street Journal that the chipmaker has reached a preliminary agreement to manufacture certain chips for Apple (AAPL). Both companies declined to comment on the report, which did not specify which Apple products would use Intel-made chips.
Foundry Ambitions Get a Boost
The potential deal represents a significant milestone for Intel's foundry business, which has struggled to attract major external clients. Intel's foundry division reported first-quarter revenue of $5.4 billion, but nearly all of that came from serving Intel's own products, with outside customers accounting for just $174 million. The division posted an operating loss of $2.4 billion, underscoring the urgency of securing a high-profile external customer.
Intel has been seeking to compete with contract manufacturing giants Taiwan Semiconductor Manufacturing Co. (TSM) and Samsung (SSNLF). Earlier this week, Reuters reported that Apple had explored tapping both Intel and Samsung for main device chip production in the United States.
Timing and Strategic Context
The timing of the deal is critical. Apple is actively searching for new chipmaking partners as advanced processor supplies become increasingly scarce. For Intel, landing Apple as a client would provide a powerful endorsement of its manufacturing capabilities and help validate its turnaround strategy under CEO Lip-Bu Tan.
Intel reported a stronger-than-expected first quarter, with revenue climbing to $13.6 billion, a 7% increase year-over-year. The company projects second-quarter revenue in the range of $13.8 billion to $14.8 billion. Tan cited “the next wave of AI” as driving fresh demand for Intel’s CPUs, wafers, and advanced packaging. Finance Chief David Zinsner emphasized that the company’s priority remains “maximizing our factory network.”
Market Reaction and Analyst Views
Investors reacted enthusiastically to the news, pushing Intel’s shares to an intraday high of $130.46 before settling at $124.92. Lynx Equity reiterated its preference for Intel over AMD (AMD), maintaining a price target of $175. However, analysts cautioned that any revenue boost from the Apple-Intel Foundry Services agreement is still some time away, as process development and design work must come first.
The competitive dynamics are less dramatic than the market reaction suggests. Apple is not abandoning its own silicon designs; rather, it is considering Intel as a manufacturing partner alongside TSMC, which currently handles the bulk of Apple’s chip production. Samsung’s facility in Texas is also under consideration, according to a prior Bloomberg report cited by Reuters.
Risks and Uncertainties
The preliminary nature of the agreement carries inherent risks. The deal could shrink, face delays, or fail to materialize into meaningful production. Apple may start with smaller chip batches and continue to rely on TSMC for key iPhone components. The company could also wait until Intel demonstrates strong manufacturing yields before committing to larger orders.
There is also the factor of U.S. government involvement. Reuters reported that the U.S. government, as Intel’s largest shareholder, helped facilitate Apple’s participation in the discussions. An administration official stated they have been working to “drum up business for Intel.”
Outlook
For now, the agreement is more symbolic than financially significant. It signals that Apple is willing to test Intel’s manufacturing revival. The real challenge lies ahead: delivering chips that meet Apple’s exacting standards, in sufficient volume, and on schedule. If successful, the deal could reshape the competitive landscape of the semiconductor industry.
