Talks remain preliminary and no orders have been placed, but supply shortages and geopolitical risk are driving Apple to weigh alternatives
Bloomberg / Getty Images
Apple $AAPL has held early-stage discussions with Intel $INTC and Samsung about manufacturing the main processors for its devices in the U.S., according to Bloomberg, as the company looks to reduce its dependence on Taiwan Semiconductor Manufacturing Co.
No orders have come from either set of conversations, and both are at an early stage, Bloomberg reported, citing people who requested anonymity given the sensitivity of the discussions. Whether Apple will ultimately pursue a partnership with either company is uncertain, and the company has expressed doubts about relying on manufacturing processes outside TSMC $TSM's ecosystem.
Intel stock rose as much as 4% in premarket trading Tuesday. Apple stock was little changed in premarket trading.
A chip shortage is part of what is pushing Apple to consider additional suppliers. During the company's most recent quarterly earnings call, CEO Tim Cook said constrained chip supply was limiting growth. "We have less flexibility in the supply chain than we normally would," Cook said. The primary bottleneck involves advanced processors used in iPhones and Macs — what Cook described as the system-on-chip, or SoC. "I believe it will take several months to reach supply-demand balance," he said.
Separately, senior Apple personnel have toured a Samsung fabrication plant taking shape in Texas, Bloomberg reported. The Korean manufacturer, which once built chip designs for Apple's iPhones more than a decade ago and currently supplies various other components for Apple's product lines, trails TSMC considerably in the contract manufacturing business — making an Apple order a potentially transformative vote of confidence.
Signing up companies to manufacture chips on its behalf sits at the heart of the turnaround plan that CEO Lip-Bu Tan is executing at Intel. After a string of earlier missteps in building out that business, securing Apple as a customer would mark a breakthrough that could open the door to further deals. There is also a diplomatic dimension to the Intel discussions: Bloomberg reported that certain Apple executives see an alliance with the chipmaker as a way to curry favor with the White House, which struck an unusual investment agreement with Intel last year and has promoted it as a symbol of American semiconductor manufacturing.
Apple's vulnerability to a single manufacturing geography has long been a concern internally. The concern has roots going back years: at an internal all-hands meeting in 2022, Cook warned that routing 60% of production through any single location "is probably not a strategic position." Efforts to diversify have included helping TSMC scale up its Arizona campus in Phoenix, which is on track to deliver 100 million chips to Apple this year — a small share of the total volume Apple requires across its device lineup.
Apple, Intel, Samsung, and TSMC all declined to comment.
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