Apple and Intel have reached a preliminary agreement for Intel to manufacture chips for Apple, according to a Wall Street Journal report. The deal would mark a significant shift for both companies, potentially putting Intel's struggling foundry business to work for one of the world's most valuable technology firms.

What This Deal Would Mean

Intel has been aggressively trying to build out its contract chip-manufacturing business — known as a foundry — as part of a broader strategy to compete with Taiwan's TSMC and South Korea's Samsung. Landing Apple as a customer would be a major commercial win, giving Intel's foundry division both revenue and credibility at a time when the unit has faced heavy losses and skepticism from investors.

For Apple, the calculus is about supply chain diversification. The company currently relies heavily on TSMC to produce its most advanced chips — the processors that power iPhones, Macs, and iPads. Adding Intel as a second manufacturing source would reduce Apple's dependence on a single supplier and on Taiwan, a geography that carries geopolitical risk given tensions with China.

What to Watch

The word "preliminary" carries real weight here. Preliminary agreements in the semiconductor industry frequently fall apart or get significantly reworked before production actually begins. Chip manufacturing contracts involve years of qualification testing, process development, and capital commitment — none of which is confirmed by this report.

Intel's foundry technology also remains a question mark. The company has made bold claims about catching up to TSMC's leading-edge manufacturing, but it has not yet proven it can produce chips at the performance and yield levels that Apple's demanding designs require. Whether Intel's process nodes can meet Apple's standards is a key unknown.

Investors will watch for any formal announcement, details on which chips would be manufactured, and whether this deal is for current-generation or future products. For Intel, even a limited production agreement with Apple would send a strong signal to other potential foundry customers sitting on the fence.