Intel seeking investment from Apple as part of its comeback bid
[SANTA CLARA, California] Intel has approached Apple about securing an investment in the ailing chipmaker, according to people familiar with the matter, part of efforts to bolster a business that’s now partially owned by the US government.
Apple and Intel also have discussed how to work more closely together, said the people, who asked not to be identified because the deliberations are private. The talks have been early-stage and may not lead to an agreement, the people said.
Shares of Intel rose 6.4 per cent to US$31.22 on Wednesday in New York after Bloomberg News reported on the discussions. Apple closed down less than 1 per cent at US$252.31.
Such a deal would follow a US$5 billion investment last week by Nvidia, which plans to work with Intel on chips for personal computers and data centres. SoftBank Group, the Japanese tech giant seeking to expand further in the US, announced a US$2 billion investment in Intel last month.
Intel also has reached out to other companies about possible investments and partnerships, the people said.
A deal with Apple, a longtime Intel customer that switched to in-house processors in the past five years, would represent further validation of the chipmaker’s turnaround bid. Still, it’s unlikely that Apple would switch back to Intel processors in its devices. The iPhone maker’s most sophisticated chips are now produced by partner Taiwan Semiconductor Manufacturing Co.
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A representative for Intel declined to comment. An Apple spokesperson did not respond to a request for comment.
Intel chief executive officer Tan Lip-Bu is attempting a comeback with the backing of the federal government. In an unconventional deal brokered by the Trump administration in August, the US acquired a roughly 10 per cent stake in the chipmaker. Intel is seen as a critical piece of efforts to reinvigorate domestic production – a priority for the White House.
Even with financial support, Intel’s challenges remain daunting. The Santa Clara, California-based company has lost its long-held technological edge and ceded market share to rivals such as Advanced Micro Devices Moreover, Intel has struggled to capitalise on booming sales of artificial intelligence gear – a speciality of Nvidia.
Once the dominant chipmaker, Intel now has a fraction of Nvidia’s sales and market capitalisation. It also has laid off workers and delayed factory expansion plans to cope with its deteriorating finances.
Still, investors have grown more optimistic about its prospects since the government infusion. The stock is up more than 60 per cent since the beginning of August.
Under former CEO Pat Gelsinger, Intel set out to become a chip foundry – a business that makes semiconductors for outside clients. But the company has struggled to secure enough customers to support its factory expansion plans.
Intel has continued to pursue the foundry strategy under Tan, though more cautiously. He said in July that Intel would only roll out a new cutting-edge production technique – called 14A – if customers committed to it.
Apple and Intel have a long, sometimes strained history together. Apple used Intel chips in its Macs for years but began shifting away from the supplier in 2020 – part of a broader effort to use more in-house components. Apple also acquired most of Intel’s modem chip business in 2019.
These days, Apple has sought to show that it’s investing heavily in the US – even as much of its production remains overseas. At a White House event in August, the company announced plans to spend US$600 billion on domestic initiatives over a four-year period, up from a previous pledge of US$500 billion. The centrepiece of the expansion was a US$2.5 billion investment in Corning, Apple’s longtime glass supplier.
Apple CEO Tim Cook told CNBC’s Jim Cramer that the investments would encourage other companies to add US production, creating a “domino effect.”
When asked about Intel, he said that competition would be good for the chip foundry industry. “We’d love to see Intel come back,” Cook said. BLOOMBERG
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