What's happening
Apple Inc. and Intel Corp. have agreed preliminarily for Intel to produce chips for Apple devices, following talks that have been ongoing for more than a year, The Wall Street Journal reported. The agreement comes as Apple faces capacity constraints at its primary chip supplier, Taiwan Semiconductor Manufacturing Company, due to heavy AI chip demand from Nvidia and other companies. Commerce Secretary Howard Lutnick has actively encouraged the partnership, meeting with Apple CEO Tim Cook, Tesla's Elon Musk, and Nvidia's Jensen Huang to drum up business for Intel.
The deal represents a significant development for Intel's foundry business under CEO Lip-Bu Tan, who replaced Pat Gelsinger in March 2025. Intel has received substantial backing, with the U.S. government converting nearly $9 billion in federal grants into a 10% stake in the company last summer, followed by Nvidia's $5 billion investment in September 2025.
Why it matters for markets
Intel shares surged 15% to 17% on May 8, 2026, reaching record highs near $130 per share and pushing the company's market cap to $630 billion. The stock has gained more than 200% year-to-date, reflecting investor confidence in the company's foundry revival strategy. Apple shares rose 1.7% to 2% on the news, with the company's market cap standing at $4.31 trillion.
The partnership could significantly boost Intel's foundry services revenue, which has been a key focus for the company's turnaround efforts. Apple's annual revenue of $451.44 billion makes it one of the world's largest technology companies, and securing Apple as a foundry customer would provide Intel with substantial and predictable revenue streams. For Apple, the deal offers supply chain diversification away from TSMC, which currently dominates advanced semiconductor manufacturing with a market cap of $2.14 trillion.
The shift highlights broader supply chain pressures in the semiconductor industry, where TSMC's capacity constraints from AI demand have created opportunities for alternative foundries. Ben Bajarin, chip analyst at Creative Strategies, noted that "Intel is the only place that can scale up capacity as a viable second source," underscoring the strategic importance of Intel's manufacturing capabilities in the current market environment.
Sectors and assets to watch
Semiconductor manufacturing companies face potential market share redistribution as Apple diversifies its supply chain. Taiwan Semiconductor Manufacturing Company, with its $2.14 trillion market cap and revenue of $4.10 trillion, could see reduced future growth from Apple if the Intel partnership expands significantly. TSMC shares declined 0.60% on May 8, trading at $411.68.
Other foundry services providers and semiconductor equipment manufacturers may benefit from increased competition and capacity expansion efforts. Intel's foundry services division competes directly with TSMC's advanced process nodes, and success with Apple could attract additional customers seeking alternatives to TSMC's constrained capacity.
What to watch next
Monitor the progression of Apple-Intel talks from preliminary agreement to formal contracts, including specific chip types, production volumes, and timeline details. Track Intel's foundry services revenue in upcoming quarterly earnings reports and any announcements of additional foundry customers following the Apple partnership. Watch for TSMC's response to potential market share pressure and any capacity expansion announcements to address AI chip demand constraints.