The Wall Street Journal reports that Apple and Intel have reached a preliminary agreement for Intel to manufacture chips for Apple devices. The deal, finalized after more than a year of negotiations, hasn't disclosed which products will be affected.
This partnership was actively brokered by the US government. Last summer, the government converted nearly $9 billion in subsidies into equity, taking a 10% stake in Intel. With that stake, the government had a direct interest in boosting Intel's performance: over the past year, Commerce Secretary Howard Lutnick met with Tim Cook multiple times to push Apple to put orders with Intel.
Apple conceded because it couldn't secure enough capacity at TSMC. Surging demand for AI chips from Nvidia and others has squeezed Apple's allocation. Cook admitted in recent earnings calls that chip shortages are causing iPhone supply constraints and will continue to affect shipments of multiple Mac models this quarter.
Winning Apple, Intel CEO Lip-Bu Tan—in office just a year—has now lined up three major clients: Nvidia invested $5 billion last September to have Intel manufacture data center CPUs, and Elon Musk announced a joint Texas fab with Intel last month. To handle the influx, Intel is pouring money into its most advanced 14A process node and even poached TSMC executive Wei-Jen Lo, risking legal battles. Buoyed by the news, Intel shares jumped 7.5% on Friday to a record high near $118.