Apple and Intel reach preliminary chip manufacturing deal, Intel shares surge nearly 20%

Apple and Intel Reach Preliminary Chip Manufacturing Deal

Apple and Intel have reached a preliminary chip manufacturing agreement after more than a year of intensive talks, a move that reverses a decade-long split and signals a potential reshaping of the semiconductor supply chain. Intel shares surged nearly 20% on the news.

The deal remains preliminary and key details are still unresolved—specifically which Apple products Intel would manufacture and whether Intel would use its own designs or Apple's custom silicon. But the trajectory is clear: Intel is rebuilding its customer base after years of technical mishaps, leadership turmoil, and defections to competitors like TSMC and Samsung.

The administration's role

The Trump administration was instrumental in brokering the deal. Commerce Secretary Howard Lutnick met repeatedly over the past year with Apple CEO Tim Cook, Nvidia CEO Jensen Huang, and SpaceX chief Elon Musk, pressing all three to send business to Intel. Trump personally advocated for the deal with Cook at a White House meeting, stating "as soon as we went in, Apple went in, Nvidia went in, a lot of smart people went in."

The administration's leverage rests partly on its own financial bet. Last summer, it converted nearly $9 billion in federal grants into Intel stock at roughly $20–$21 per share. Intel now trades near $125 per share, meaning the White House position has appreciated sharply and the government can credibly claim its backing attracted partners.

Existing Intel partnerships

Intel is not starting from scratch. Nvidia invested $5 billion in September and announced a partnership under which Intel would build custom data center processors for Nvidia. Elon Musk has separately announced the TeraFab project, which involves foundry work with Intel. The Apple deal would complete a trifecta of marquee partners, all brokered or accelerated by the administration's pressure campaign.

Why Apple needs alternatives

Apple relies almost entirely on TSMC for chips in iPhones, iPads, Macs, and other devices. On its last two earnings calls, CEO Tim Cook cited constrained advanced chip availability as a drag on sales, warning that Mac Mini and Mac Studio supplies would take "several months to reach supply demand balance."

Apple's leverage with TSMC has weakened as skyrocketing demand from Nvidia and other AI chip designers has strained the foundry's capacity. Adding Intel as a secondary supplier, even for a subset of products, reduces that dependency risk—a goal that aligns with the administration's broader push to reduce reliance on Taiwan and build resilient domestic manufacturing.

Intel's internal reshaping

Lip Bu Tan, hired as CEO in March 2025 to replace Pat Gelsinger, has aggressively rebuilt Intel's leadership and product roadmap. He brought in Wei Gen Lowe, a former TSMC executive, a hire that prompted a lawsuit from TSMC. Tan has also reshuffled the heads of product, data center processors, client computing, and newly formed custom silicon units.

The company is betting heavily on its advanced 14a manufacturing process—the node Intel hopes customers will collectively commit to, creating momentum and economies of scale.

Context

Apple switched from Intel processors to custom ARM-based silicon in 2020. That transition, combined with Intel's technical stumbles, left Intel with few marquee customers. The preliminary Apple deal suggests that bet on domestic manufacturing and supply chain diversification may now be opening doors that have been closed for nearly a decade.