Intel Courting Apple for Strategic Investment as Chipmaker Battles Foundry Losses

Intel Corporation has approached Apple Inc. about securing a potential investment in the struggling semiconductor manufacturer, according to Bloomberg News, as part of broader efforts to revitalize a business now partially owned by the U.S. government. The discussions between the two tech giants have also reportedly explored ways to strengthen their collaboration, though sources familiar with the matter emphasize that talks remain in preliminary stages with no guarantee of reaching an agreement.

Intel’s stock surged more than 6% following the Bloomberg report, reflecting investor optimism about the potential partnership. The market reaction underscores how critical external validation has become for Intel as it navigates one of the most challenging periods in its corporate history.

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The Context Behind Intel’s Outreach

The reported Apple discussions come at a pivotal moment for Intel, which has been aggressively seeking external partners and investors to shore up its transformation from a traditional integrated device manufacturer to a major contract chip foundry. This latest outreach follows a $5 billion investment commitment from Nvidia Corporation just last week, marking a roughly 4% stake in the chipmaker. Additionally, SoftBank Group invested $2 billion in Intel last month, demonstrating continued confidence in the company’s long-term prospects despite near-term challenges.

Perhaps most significantly, the White House engineered an extraordinary deal in August for the federal government to acquire approximately 10% of Intel through an $8.9 billion CHIPS Act funding arrangement, positioning the company as a cornerstone of America’s semiconductor manufacturing renaissance.

The federal investment reflects Intel’s strategic importance to U.S. national security and technological sovereignty. As veteran chip industry analyst Dan Hutcheson noted, “The purpose of the Chips Act was partly to make sure we kept Intel as an American company supported by the American government.” This government backing provides Intel with unprecedented financial resources to execute its ambitious foundry expansion plans.

Intel’s Foundry Business: A Expensive Gamble

Central to Intel’s current struggles is its foundry division, which has become a significant financial burden despite being crucial to the company’s future strategy. Intel Foundry Services incurred devastating operating losses of $13 billion in 2024, following a catastrophic $7 billion loss on revenues of $18.9 billion in 2023. These losses prompted CNBC’s Jim Cramer to question the viability of domestic semiconductor manufacturing, highlighting Intel’s $18.8 billion foundry division loss despite receiving $8.5 billion in U.S. CHIPS Act subsidies.

Intel CEO Lip-Bu Tan has been frank about the foundry division’s challenges, telling investors that “2024 is the trough for foundry operating losses” while committing to break-even operating margins “about midway” to the company’s goal of becoming the number-two foundry by 2030. The company targets achieving 40% non-GAAP gross margins and 30% non-GAAP operating margins by the end of the decade for its foundry business.

The foundry struggles stem from Intel’s ambitious “IDM 2.0” strategy, launched under former CEO Pat Gelsinger, which represented a fundamental shift from manufacturing chips exclusively for its own designs to competing directly with Taiwan Semiconductor Manufacturing Company (TSMC) in the contract manufacturing market. However, Intel has acknowledged in SEC filings that it has “been unsuccessful to date in securing any significant external foundry customers for any of our nodes and our prospects for securing a significant external foundry customer for Intel 14A are uncertain.”

Why Apple Makes Strategic Sense

For Intel, securing Apple as an investor would represent validation from one of the world’s most discerning technology companies. Apple had been a longtime Intel customer before transitioning to its own custom-designed silicon chips starting in 2020. The relationship between the companies has deep historical roots, with Apple depending on Intel processors for its Mac computers for over a decade before the strategic shift to Apple Silicon.

The potential investment discussions coincide with broader efforts by Apple CEO Tim Cook to demonstrate domestic manufacturing commitment while maintaining favorable relations with the Trump administration. Apple has significantly expanded its U.S. commitments, announcing plans to spend $600 billion on domestic initiatives over four years, up from a previous pledge of $500 billion. This includes substantial investments in American suppliers and manufacturing capabilities.

From Apple’s perspective, partnering with Intel could provide valuable diversification of its chipmaking supplier base, which currently relies heavily on TSMC for manufacturing its most advanced processors. Such diversification could prove strategically important if geopolitical tensions in Taiwan escalate, given China’s territorial claims over the island. Industry speculation suggests Apple might utilize Intel’s U.S.-based foundries for TSMC operations, potentially bringing Taiwanese engineers and equipment to Intel facilities to train American workers while producing Apple chips domestically.

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The Broader Investment Wave

Intel’s pursuit of Apple represents part of a broader fundraising campaign as the company seeks to finance its massive capital expenditure requirements. Intel remains committed to over $100 billion in new U.S. chipmaking capability and capacity investments over the next five years, representing the largest such commitment by any semiconductor manufacturer in America.

The Nvidia partnership, announced just days before the Apple reports, includes collaboration on PC and data center chips but notably excludes Intel’s foundry business from manufacturing Nvidia’s semiconductors. Other major technology companies, including AMD, Broadcom, and reportedly Google, are evaluating or conducting test runs on Intel’s advanced 18A manufacturing process.

Intel has secured significant foundry commitments, including expanded collaboration with Amazon Web Services involving multi-billion-dollar framework agreements and a commitment from Microsoft valued at $15 billion in total deal value. Additionally, Intel secured up to $3 billion under the U.S. government’s CHIPS Act Secure Enclave program for trusted manufacturing of leading-edge semiconductors for national security applications.

Market Position and Competitive Landscape

Intel’s fundraising efforts occur against a backdrop of intense competitive pressure in the semiconductor industry. Once the chip industry’s flag bearer that claimed to put the “silicon” in Silicon Valley, Intel has struggled to compete in the booming artificial intelligence race, falling behind peers such as Nvidia and Advanced Micro Devices. The company’s market position has deteriorated significantly, with some analysts noting that Intel is no longer considered a top 10 chipmaker.

Despite these challenges, Intel’s stock has climbed more than 40% since mid-August, reflecting improved investor sentiment following the series of strategic investments and government backing. The market response demonstrates that while Intel faces significant operational challenges, investors remain optimistic about the company’s long-term transformation strategy.

However, concerns persist about execution risks, particularly regarding Intel’s flagship 18A manufacturing process, where only a small fraction of produced chips have met quality standards, raising questions about the company’s readiness to deliver high-end components at scale.

Political and Economic Implications

The potential Apple investment carries significant political dimensions, reflecting the Trump administration’s emphasis on domestic semiconductor manufacturing and supply chain resilience. White House spokesperson Kush Desai emphasized that while the U.S. Government is not involved in Intel’s day-to-day operations, “The taxpayer has an equity stake in Intel succeeding, and the Administration supports iconic American companies like Intel doing what’s best to cement American tech dominance.”

The investment discussions come amid intense pressure from Washington for American companies to onshore manufacturing capabilities. Apple’s potential investment in Intel would align with broader national security objectives while potentially providing the iPhone maker with strategic manufacturing alternatives.

Looking Forward

Intel CEO Lip-Bu Tan continues actively seeking partners as part of the company’s turnaround strategy, with Bloomberg reporting that Intel has reached out to other companies about possible investments and partnerships beyond Apple. The success of these efforts will largely determine whether Intel can execute its ambitious transformation from a traditional chipmaker to a major foundry competitor.

For Apple, any investment decision will likely hinge on Intel’s ability to demonstrate manufacturing capabilities that meet the exacting standards required for Apple’s products. While unlikely that Apple would switch back to Intel processors for its devices, given the success of its custom silicon strategy, the foundry relationship could provide valuable manufacturing diversification.

The semiconductor industry will be watching closely to see whether Intel can convert its recent investment momentum into operational success. With foundry losses expected to continue into 2025 before achieving break-even, the coming years will test whether Intel’s bold strategic pivot can restore the company to its former industry leadership position.

As talks between Intel and Apple remain in early stages, both companies declined to comment on the reported discussions. The outcome of these negotiations could significantly impact the competitive landscape of American semiconductor manufacturing and supply chain resilience in the technology sector.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

25th September, 2025