Intel (INTC) Stock Jumps 3.4% on Potential Apple Manufacturing Partnership

TLDR

• Intel shares climbed approximately 3.4% to $99.06 in premarket trading after Bloomberg disclosed exploratory chip production conversations with Apple.
• Apple is seeking preliminary discussions with Intel and Samsung regarding the manufacturing of core processors for its product lineup.
• Senior Apple representatives toured Samsung’s semiconductor fabrication plant currently being built in Texas.
• These preliminary talks signal Apple’s strategic effort to decrease dependence on Taiwan Semiconductor Manufacturing (TSM).
• Neither party has confirmed any agreement; Intel and Apple both refused to provide statements.

Intel has quietly pursued an ambitious goal to establish its foundry division as a competitive force in the semiconductor industry. Tuesday brought what could be a significant development in that effort.

Intel Corporation, INTC

According to a Bloomberg report, Apple has engaged in preliminary conversations with Intel regarding the potential use of its manufacturing capabilities to produce chips for Apple’s product ecosystem. The revelation boosted Intel shares by 3.4% during premarket hours, pushing the price to $99.06.

This upward movement allowed Intel to recoup some of the ground lost during Monday’s trading session, which saw the stock face downward pressure.

When approached for comment on Tuesday morning, both Intel and Apple remained silent on the matter. Samsung, which has also reportedly engaged with Apple, similarly offered no response.

Samsung Enters the Picture

Apple’s search for alternative chip suppliers extends beyond Intel. According to the Bloomberg report, the tech giant has initiated contact with Samsung as well. Senior leadership from Apple allegedly toured Samsung’s semiconductor manufacturing facility currently being developed in Taylor, Texas.

Samsung’s stock experienced a dramatic response. Trading in Seoul ended with a 5.4% surge, reaching a record-breaking KRW232,500.

Bloomberg emphasized that these conversations remain in their infancy, with no commitments or finalized plans in place.

Intel’s Foundry Business Seeks Major Client

Intel has invested enormous sums in developing its foundry operations, aiming to become America’s answer to Taiwan Semiconductor Manufacturing. However, securing significant third-party customers has proven challenging.

The most prominent partnership Intel has secured involves Elon Musk’s Terafab initiative, designed to support Tesla and other ventures within Musk’s business empire. Specific terms of that collaboration have not been publicly disclosed.

A manufacturing agreement with Apple would represent an entirely different magnitude of opportunity. Apple designs proprietary processors — its M and A-series chips — that power iPhones, iPads, and Mac computers. TSMC currently handles virtually all of this production.

The Bloomberg report specifically mentioned that conversations encompass the potential for Intel to manufacture Apple’s primary processors, representing the most valuable contract category Intel could secure.

Barron’s featured Intel as a recommended stock pick in recent weeks when shares were trading near $64. The stock has appreciated substantially since that recommendation.

TSMC shares increased modestly by 0.99% on Tuesday. The chipmaker has maintained its position as Apple’s primary manufacturing partner and continues to lead the industry in cutting-edge chip fabrication.

Apple’s apparent effort to broaden its chip manufacturing network reflects a wider industry trend toward reducing vulnerability to single-source dependencies.

Whether Intel or Samsung will ultimately secure Apple’s business remains uncertain. For the moment, investors have determined that even the possibility holds considerable value.

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