As part of a broad strategy to return to the top, Intel is in early talks with Apple about a potential investment and closer collaboration. For Intel, struggling in the AI market, financial and technological support from the Cupertino giant would send a powerful signal to the market.
For Apple, it would be an opportunity to diversify its supply chain in geopolitically unstable times.
The initiative is the latest in CEO Pat Gelsinger’s ambitious plan to reclaim Intel’s former glory. The company, once synonymous with innovation in Silicon Valley, has been overshadowed by competitors such as Nvidia and AMD in recent years, particularly in the booming artificial intelligence segment.
To fund its costly transformation and build new factories in the US, Intel is actively seeking strategic partners. The talks with Apple come just days after Nvidia announced a $5 billion investment in exchange for a roughly 4% stake.
Earlier, the company also secured $10 billion from the US federal government (in exchange for a 10% stake) and $2 billion from SoftBank Group. These cash injections have already improved investor sentiment, which has translated into a more than 40% increase in share value since mid-August.
Why would Apple, which abandoned Intel ‘s processors in favour of its own Apple Silicon chips in 2020, now return to the negotiating table? The answer lies in strategy and risk management.
Firstly, diversification of the supply chain. Apple today is heavily dependent on Taiwanese manufacturer TSMC. A potential partnership with Intel would allow the company to diversify production of key components and hedge against escalating geopolitical tensions in the Taiwan region.
Secondly, the relationship with the US administration. The investment in a key US chipmaker is part of Apple’s commitment to increasing domestic investment, which could further strengthen the company’s position in Washington.
Although the talks are at an early stage and there is no guarantee of success, the very fact that they are taking place is significant. For Intel, gaining Apple as a customer for its foundry business would be the ultimate validation of its chosen IDM 2.0 strategy.
This would be a much bigger success than the deal with Nvidia, which, while including joint chip development, does not involve manufacturing its computing chips in Intel’s factories.
Intel’s future depends on its ability to attract external customers to its factories. A potential alliance with a former key partner could prove to be a decisive step in this game.
