Apple Explores Intel and Samsung for US Chip Production, Intel Stock Surges 14%

Key facts

• Apple held exploratory discussions with Intel and Samsung about producing main processors for its devices.
• Intel stock surged 14% on the news, hitting a new all-time high and surpassing Oracle in market value.
• Apple executives visited a Samsung plant under development in Texas.
• Apple is concerned about reliability and scale of non-TSMC technology.
• No orders have been placed with Intel or Samsung yet; talks are at early stages.
• Apple warned of chip supply constraints in its latest quarterly results.
• iPhone 17-family chips use a variant of TSMC's manufacturing technology used for AI chips.
• Intel declined to comment; Apple and Samsung did not respond to requests.

Apple's Chipmaking Pivot: Talks with Intel and Samsung

Apple has held exploratory discussions with Intel and Samsung Electronics about producing the main processors for its devices, according to people familiar with the matter. The talks, reported on Monday, signal a potential shift from Apple's longtime reliance on Taiwan Semiconductor Manufacturing Co (TSMC) for its most critical chips. Apple executives have visited a Samsung plant under development in Texas and separately held preliminary talks with Intel about enlisting its chipmaking services. The move would offer Apple a secondary option beyond TSMC, but the company is wary of using non-TSMC technology, citing concerns about reliability and scale.

Intel Stock Soars to Record High on News

Intel's stock surged 14% following the report, reaching a new all-time high and pushing its market value above that of Oracle. The jump reflects investor optimism that Intel could win a major customer like Apple, which would be a significant boost to its foundry business. Intel has been investing heavily in its chip manufacturing capabilities, including plans to build new factories in the US. The company declined to comment on the talks with Apple.

Early-Stage Discussions with No Orders Yet

The discussions with Samsung and Intel remain at early stages, and neither effort has resulted in any orders so far, the report said. Apple is still in exploratory mode, evaluating the feasibility of using alternative suppliers for its main processors. Samsung is also expanding its US presence with a new plant in Texas, which Apple executives have visited. However, the company has not committed to any production agreements.

Apple's Chip Supply Constraints and TSMC Dependence

Apple warned of continuing chip supply constraints when it reported results last month. Former CEO Tim Cook said that iPhone sales were held back in the quarter by supply constraints for the advanced processor chips that form the brains of the device. The iPhone 17-family's chips are made on a variant of the same TSMC chip manufacturing technology used for many leading AI chips. This deep integration with TSMC makes any switch complex and risky.

Concerns Over Reliability and Scale of Non-TSMC Technology

Apple is concerned about using non-TSMC technology, particularly regarding reliability and scale, according to the report. TSMC has a long track record of producing high-volume, high-quality chips for Apple, and any new supplier would need to meet those standards. Intel and Samsung are both investing heavily in advanced manufacturing, but they have yet to prove they can match TSMC's yields and performance for Apple's demanding requirements.

Strategic Implications for US Chip Manufacturing

The talks come amid a broader push by the US government to boost domestic semiconductor manufacturing, with incentives from the CHIPS Act. If Apple were to move some production to Intel or Samsung in the US, it would be a major win for that policy. However, the early stage of discussions means no immediate impact on supply chains. Apple will likely continue to rely on TSMC for the foreseeable future while exploring options for diversification.

Outlook: A Long Road Ahead for Apple's Chip Sourcing

The exploratory talks with Intel and Samsung represent Apple's effort to reduce its dependence on TSMC, but significant hurdles remain. Reliability, scale, and cost are all critical factors that will take years to resolve. For now, Intel's stock surge reflects market enthusiasm, but the reality of a deal is far from certain. Apple's cautious approach suggests that any shift will be gradual, if it happens at all.

The bottom line

• Apple has held preliminary talks with Intel and Samsung about making main processors for its devices, but no orders have been placed.
• Intel's stock jumped 14% to a record high, making it more valuable than Oracle.
• Apple is concerned about reliability and scale of non-TSMC technology.
• Apple warned of chip supply constraints in its latest quarterly results.
• The talks are at an early stage and may not lead to any production agreements.
• Apple's dependence on TSMC remains deep, with iPhone 17 chips using TSMC's advanced AI-chip technology.