Apple chips from Intel: Here's what's behind Apfelpatient

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US President Donald Trump has announced a partnership between Apple and Intel: The chip manufacturer will produce processors for Apple devices in its US factories. However, the scope of the agreement remains unclear – and Apple's top-of-the-line chips are unlikely to be included initially. Nevertheless, the news caused a stir on the stock market.

Apple designs its own chips, but for years has had them manufactured almost exclusively by the Taiwanese contract manufacturer TSMC. The company has been trying to reduce this dependence for some time now – and Intel is increasingly coming into focus. An analyst report a month ago revealed that Intel had already begun manufacturing the first Apple chips. Now Trump has publicly confirmed the collaboration – albeit without providing many details.

A partnership with open details

On his TruthSocial platform on Thursday, Trump announced that Apple and Intel had agreed to a partnership under which Intel would manufacture chips for future Apple devices at its US production facilities. The extent and scope of the agreement remained unclear. Official confirmation from Apple itself is still pending.

The stock market reacted promptly: Intel shares rose by around nine percent in pre-market trading, while Apple shares climbed by 0.6 percent.

Intel is already part of the supply chain

This collaboration isn't new. Analyst Ming-Chi Kuo had already reported that Intel had begun producing chips for older iPhone, iPad, and Mac models. Importantly, these are still chips entirely developed by Apple. Intel is simply handling the manufacturing, thus entering the supply chain on the production side – not as the developer.

Why the top chips remain with TSMC

It is considered unlikely that Intel will supply the most advanced processors for Apple's most expensive iPhones in the short term. State-of-the-art semiconductor manufacturing is extremely complex, and TSMC is significantly ahead in this area – also due to the enormous quantities Apple requires. Therefore, in the near future, any collaboration with Intel is likely to be limited to entry-level devices and older product generations.

For Apple, a second high-performing manufacturer would still be appealing: genuine competition between suppliers could put TSMC under price pressure and secure better terms for Apple. The picture could shift in the long term, but in the short term, TSMC remains a shoo-in.

More manufacturing in the USA

Beyond the pure logic of the supply chain, this move also brings Apple economic and political advantages because it strengthens "Made in America" production. However, past experience shows that the US factories primarily supply older chip generations. How realistic the Chip production in the USA is actually, depends heavily on how quickly modern manufacturing hubs become available there – the latest Apple chips are still being produced in Asia.

A second source of income, not a farewell to TSMC

The announced partnership fits into Apple's strategy of diversifying its chip manufacturing operations across a wider geographical area. Instead of a break with TSMC, the aim is to establish a second pillar that mitigates risks in global production and is politically advantageous for Apple. However, as long as Intel only manufactures older and simpler chips, the immediate impact will remain limited. The true substance of the announcement will likely only become clear once Apple releases details – and once it becomes apparent which chips will actually be produced at Intel's US factories in the future. (Image: Shutterstock / Below the Sky)