Intel tests making Apple chips again
What's the story
Intel is gearing up to manufacture some of Apple's chips for the first time in a while. The tech giant has started small-scale testing of lower-end iPhone, iPad, and Mac processors using Intel's 18A-P chip manufacturing process. The move could mark a major shift in Apple's supply chain strategy, as Taiwan Semiconductor Manufacturing Company (TSMC) has been its sole chip manufacturer since 2016.
Manufacturing timeline
Production testing with Intel expected to start in 2026
According to Apple supply chain analyst Ming-Chi Kuo, production testing with Intel is expected to begin in 2026. If successful, larger-scale manufacturing could ramp up through 2027 and 2028. However, even if Intel's plans are successful, TSMC is still expected to handle over 90% of Apple's chip supply. This indicates that while Apple is diversifying its chip suppliers, it will continue to rely heavily on TSMC for most of its chip production needs.
Information
Apple exploring Intel's other advanced-node technologies
Kuo also revealed that Apple is actively evaluating Intel's other advanced-node technologies. The company has kicked off three main product lines at Intel simultaneously, with wafer allocation roughly matching its end-device sales mix. This indicates Apple is simulating and validating Intel's potential as full-product-line supplier.
Strategic response
Apple's strategic move to hedge against TSMC's capacity constraints
Apple's decision to partner with Intel is a strategic move to hedge against TSMC's advanced-node capacity becoming scarce and its allocation tilting toward AI. The tech giant recognizes that the revenue contribution gap between AI/HPC and smartphones will keep widening. Hence, it needs to cultivate a new supplier while still holding bargaining power, leveraging its design capabilities to maintain its relationship with TSMC while advancing its partnership with Intel.
Business challenges
Apple's orders to Intel could reshape the semiconductor landscape
The strategic significance of Apple's orders to Intel goes far beyond the headline financials. However, Apple's demanding standards and Intel's strategy of taking orders from other customers simultaneously will make it harder for the latter to rebuild its advanced-node foundry business. Despite these challenges, the partnership with Apple presents a unique opportunity for Intel as it gets access to a wide range of orders across Apple's full product line.