Apple Taps Intel for Chip Manufacturing to Reduce TSMC Reliance

Apple has reached a preliminary agreement with Intel to manufacture chips for its devices, marking a strategic shift to reduce its heavy reliance on TSMC after more than a year of intensive negotiations. The deal, first reported in early May 2026, involves Intel producing processors using its 18A-P process node with Foveros packaging technology, primarily for lower-end iPhones, iPads, and Macs. iPhone processors are expected to comprise roughly 80 percent of the initial order mix. Small-scale testing is slated for 2026, with production ramping in 2027 and 2028 before declining in 2029. Intel is targeting manufacturing yields of 50 to 60 percent or higher by 2027.

The partnership is driven by tightening capacity at TSMC, where surging demand from AI customers like NVIDIA has constrained production for smartphone chips. Despite the Intel deal, TSMC is expected to retain over 90 percent of Apple's total chip supply for the foreseeable future, particularly for high-end processors. Analysts note TSMC maintains competitive advantages in yields, power efficiency, and advanced packaging, meaning Apple faces significant supply chain risks if it shifts flagship orders away from the Taiwanese foundry.

The U.S. government played a significant role in facilitating the agreement. Commerce Secretary Howard Lutnick met repeatedly with Apple CEO Tim Cook and other senior tech officials to encourage the partnership. The federal government, which recently took a roughly 10 percent stake in Intel, has pushed to bolster domestic semiconductor production. Reports also indicate the Trump administration pressured Apple to diversify its supply chain. Intel CEO Lip-Bu Tan is leading the effort to revitalize the company's foundry business through contracts like this. Following the initial report, Intel shares rose approximately 14 to 15 percent, while Apple shares increased about 2 percent. Neither company has officially commented on the arrangement.