The White House’s decision to take a 9.9% stake in Intel Corp. is looking like very shrewd business indeed. Since the government bought in at $20.47 a share last August, the American chipmaker’s surging stock price has delivered the US a $43 billion return.
One of the reasons the investment has so far proved so sound is that the White House has made sure of it. According to The Wall Street Journal, Commerce Secretary Howard Lutnick personally pushed deals on Intel’s behalf with some of the most lucrative clients you could think of. They include Nvidia Corp., the company at the heart of the AI revolution; SpaceX, which would like to be; and now, reportedly, Apple Inc. — a crown jewel client that would be the firmest stamp of approval yet on the Intel turnaround project.
Under the “preliminary” deal, the Journal reported, Intel’s foundry business would handle some of Apple’s chip needs, though for which products has not been confirmed. TF International Securities analyst Ming-Chi Kuo, a longtime observer of Apple’s supply chain, wrote earlier this month that Apple had “kicked off low-end/legacy iPhone, iPad, and Mac” chip manufacturing with Intel.
The two companies have worked together before, of course. Intel used to be Apple’s chip supplier for Macs before Apple announced in 2020 that it would fare better by designing its own chips and then having Taiwan Semiconductor Manufacturing Co. (TSMC) make them. Analysts point to this move to “Apple Silicon” as foundational to its sustained success with hardware, allowing it to achieve greater cost and performance efficiencies. Consumers feel it when they use Apple products in concert with one another — the vertical integration of hardware and software is what has given Apple its edge.
Apple’s preference would have been to keep things humming along like this, but the AI revolution had other ideas. Even with its vast riches and influence, the iPhone maker hasn’t been insulated from choked supply chains. In Apple’s earnings call last month, Chief Executive Officer Tim Cook discussed how Apple’s chief supply challenge was in getting enough access to the super-sophisticated manufacturing facilities that are needed to produce its chips. Just like the makers of memory chips, TSMC stands to generate better revenue making chips used in AI data centers than it does on those built for smartphones. Apple has been pushed down the pecking order. “Apple therefore needs to cultivate a new supplier while it still holds bargaining power,” Kuo wrote.
Enter Intel, with promises of a super-sophisticated machine of its own — the 14A advanced manufacturing node. And, before that, the 18A node. It’s not until tech reaches the hands of consumers that it gets an appealing name like “iPhone” or “Pentium,” but what you need to know about 18A and 14A is that they are Intel’s last gasps at a comeback. The strategy is to try and emulate TSMC’s success by luring companies with semiconductor designs — like Apple or Nvidia — to come to have their chips custom-built. That differs from the old Intel, which would only design and make its own chips and then sell them, mostly to companies making PCs. It continues to do this, but only by attracting large outside clients will Intel’s so-called foundry business be viable, the company has said.
