TLDR
- Intel has approached Apple about a potential investment as part of its turnaround efforts
- Intel shares jumped 6.4% on Wednesday following the Bloomberg report about Apple discussions
- Intel has already secured $5 billion from Nvidia and $2 billion from SoftBank for its comeback bid
- The US government acquired roughly 10% stake in Intel through an August deal
- Seaport Research upgraded Intel but warns the company is on the “wrong path” with its manufacturing strategy
Intel shares climbed 6.4% to $31.22 on Wednesday after reports surfaced that the chipmaker has approached Apple about securing an investment. The stock rose another 3.6% in premarket trading Thursday, bringing year-to-date gains to 56%.
The discussions between Intel and Apple remain in early stages and may not lead to any agreement. Both companies have declined to comment on the reported talks.
CEO Lip-Bu Tan has been actively seeking partnerships as part of Intel’s turnaround strategy. The Apple discussions follow a $5 billion investment from Nvidia last week, where the two companies plan to collaborate on PC and data center chips.
SoftBank Group announced a $2 billion investment in Intel last month. Intel has also reached out to other potential partners about investments and collaborations.
The potential Apple deal would mark a notable development given the companies’ history. Apple used Intel processors in Mac computers for years but began transitioning to its own chips in 2020.
Apple also acquired most of Intel’s modem chip business in 2019. The iPhone maker now produces its most advanced chips through Taiwan Semiconductor Manufacturing Company.
Government Backing Provides Foundation
Intel received federal backing in August when the US government acquired roughly 10% of the company. The Trump administration brokered this unconventional deal as part of efforts to strengthen domestic chip production.
The government support has helped boost investor confidence. Intel’s stock has risen more than 60% since early August when the federal investment was announced.
Intel faces major challenges in its comeback attempt. The company has lost technological advantages to rivals like Advanced Micro Devices and Nvidia.
The Santa Clara-based chipmaker has struggled to capitalize on AI chip demand that has driven Nvidia’s success. Intel now has a fraction of Nvidia’s sales and market value.
Intel has laid off workers and delayed factory expansion plans to manage its financial difficulties. The company continues pursuing its foundry strategy but with more caution than before.
Analyst Concerns Persist
Seaport Research Partners upgraded Intel from Sell to Neutral but maintains reservations about the strategy. Analyst Jay Goldberg suggests Intel should consider selling or shutting down its manufacturing operations.
Goldberg believes Intel faces a shrinking window to save its fabrication facilities. He notes that Nvidia’s investment didn’t include commitments to use Intel’s manufacturing services over Taiwan Semiconductor.
The analyst points to Intel’s lack of AI strategy and concerns about gross margins and cash flow. These issues may become more apparent over time despite current investor optimism about strategic investments.
Apple CEO Tim Cook has expressed support for domestic chip production competition. At a White House event, Cook said competition would benefit the foundry industry and that Apple would “love to see Intel come back.”
Intel stock closed Thursday’s premarket session at $32.35 as investors continue betting on the potential for additional strategic partnerships.
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