Intel to Make Apple Chips: Report

The Wall Street Journal reports that after more than a year of negotiations, Apple and Intel have reached a preliminary agreement for Intel to manufacture certain processors for Apple.

Sources close to both Apple and Intel tell the Journal that Apple is reportedly looking for alternative fabs to TSMC, as it wants to diversify its supply chain in the midst of ongoing chip shortages. For its part, TSMC is looking to lighten its load of less profitable processors, so it can focus on the more expensive and more lucrative AI market.

Although they didn’t say which processors, it would seem that Intel is going to manufacture chips for the much-hyped MacBook Neo as well as the iPhone and iPad. The Neo uses the same SoC processor as the portable devices, the A18 processor.

Apple was reportedly considering Intel’s 18A process for its entry-level M-series chips as early as November of last year. Intel has bet big on 18A being the primary process node for its foundry business. So far, Intel has one customer for its foundry business, but it’s a big one: Amazon Web Services.

It is rather ironic that Intel would take Apple’s business for its MacBook Neo. The Neo is a mass market laptop meant to compete with low-end x86 notebooks, the first time Apple has gone for a mass market product. Usually its MacBooks command a premium price, and Intel lives in the low end through its many OEM partners.

Since abandoning x86 in 2023, Apple has designed its own Mac processors using the Arm architecture. The systems-on-a-chip design was then manufactured by TSMC using the most advanced production processes in Taiwan.

But supply-chain disruptions are hitting across the industry. Most of the problems are due to shortages, particularly memory, as demand has completely outstripped supply. In the case of TSMC, though, it’s simply that the chip manufacturer is pretty much the only game in town when it comes to advanced process nodes and everybody wants to use them.

That’s why its customer base includes NVIDIA, AMD, Broadcom, Marvell, and even some Intel. TSMC’s manufacturing lines are stretched to their limit, running 24 hours a day and still not able to keep up with demand.

By offloading manufacturing of a relatively low-end product to Intel, this frees up TSMC to make more profitable products, such as GPUs. And it gives Intel a new customer and Apple a new supplier for critical parts. So it’s a win all around.