Shares of Intel surged 14% on Tuesday to reach a new all-time high, after Bloomberg reported that Apple has opened early-stage discussions with Intel and Samsung about sourcing the main processors for its U.S. device lineup from domestic manufacturers.
No orders have resulted from either set of conversations, and both remain at an early stage, according to Bloomberg, citing unnamed sources. Apple has also expressed doubts about relying on manufacturing processes outside the ecosystem of its longtime chip supplier, Taiwan Semiconductor Manufacturing Co. Apple, Intel, Samsung, and TSMC all declined to comment.
A chip shortage is part of what is pushing Apple to look at additional suppliers. On the company’s most recent quarterly earnings call, CEO Tim Cook said constrained supply was limiting growth, with the primary bottleneck involving 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,” Cook said.
There is also a diplomatic dimension to the Intel discussions: certain Apple executives see an alliance with the chipmaker as a way to curry favor with the White House, which struck an investment agreement with Intel last year and has promoted it as a symbol of U.S. semiconductor manufacturing, according to Bloomberg.
For Intel CEO Lip-Bu Tan, signing up companies to manufacture chips on its behalf sits at the heart of the turnaround he is executing at the company. Securing Apple as a customer would mark a significant step in that effort.
Samsung, which 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 in the contract manufacturing business. Senior Apple personnel have toured a Samsung fabrication plant under construction in Texas, according to Bloomberg.
Apple’s exposure to a single manufacturing geography has been a long-running internal concern. 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.
Tuesday’s gain adds to a broader rally that has reshaped Intel’s standing on Wall Street. April alone produced the strongest monthly performance in the company’s five-and-a-half decades as a publicly traded firm, with a 114% advance lifting its market capitalization above $470 billion. Measured from the point last August when the U.S. government acquired a 10% stake for $8.9 billion, the stock has now appreciated by more than 330%.