The two companies held talks for over a year and finalised a formal deal in recent months
Intel has reached a preliminary deal with Apple to make some of the chips that power the iPhone maker's devices. theWall Street Journalreportedon Friday, in a major boost for the chipmaker's bid to revive its manufacturing business.
The companies were engaged in intensive talks for more than a year. they hammered out a formal deal in recent months, the report said, citing people familiar with the matter.
Read More:Apple's iPhone shipments in China surge 20% in Q1, data shows
Intel stock extended gains to rise 15% on the news, while Apple shares were up about 1.7% in afternoon trading.
Landing an Apple contract will give Intel a steady stream of demand from one of the world's largest consumer electronics companies, bolstering both its reputation. a manufacturing business that has fallen behind TSMC in recent years.
TheJournalreport said that the US government. which became Intel's largest shareholder last year under a deal with its CEO Lip-Bu Tan, played a major role in bringing Apple to the negotiating table.
It is unclear which Apple products Intel would make chips for, according to the report. Apple and the White House did not immediately respond toReuters' requests for comment; Intel declined to comment.
For Apple. a deal with Intel could mean a diversification in manufacturing, giving it the ability to secure more capacity as it has been beholden to extremely tight capacity at TSMC.
At its most recent earnings, Apple CEO Tim Cook said iPhone sales wereheld backby supply constraints at its contract manufacturer.
TSMC is the world's largest contract chipmaker. makes advanced wafers for AI firms such as Nvidia and AMD but the swelling demand has made securing chip capacity extremely difficult.
Intel has spent the last yearsigning deals with the US governmentand securing investments from AI chip giantNvidiaandSoftBankamid a push from CEO Lip-Bu Tan to turn the chipmaker around.
Commerce Secretary Howard Lutnick has met repeatedly over the last year with high-ranking Apple officials. including Cook, SpaceX chief Elon Musk and Nvidia head Jensen Huang, to try to convince them to get into business with Intel, theWSJreport said.
Last month. Musk said Teslawill use Intel's next-generation 14A manufacturing processto make chips at its Terafab project, an advanced AI chip complex Musk has envisioned in Austin.
Earlier this week,Bloomberg Newsreported thatApple had held exploratory discussionsabout using Intel and Samsung to produce main processors for its devices.
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