Intel Seeking Investment From Apple As Part Of US-Backed Comeback

Now that it is literally a ward of the state,  the once iconic chip giant Intel – which was so close to collapse in recent months, the US government had to be gifted a 10% stake just to backstop it – has approached Apple about securing an investment in the ailing chipmaker, Bloomberg reported citing people familiar, part of renewed efforts to bolster a business that’s now partially owned by the US government.

Apple and Intel also have discussed how to work more closely together, which is somewhat awkward after Apple dumped Intel five years ago, when it switched to producing its own more efficient chips. 

The talks have been early-stage and may not lead to an agreement, the reports said.

Any deal would follow a $5 billion investment last week by Nvidia (one which we correctly anticipated over a year ago), which plans to work with Intel on chips for personal computers and data centers. SoftBank also announced a $2 billion investment in Intel last month. 

A deal with Apple – which as noted was a longtime Intel customer that switched to in-house processors in the past five years – would represent further validation of the chipmaker’s turnaround bid. Still, even Bloomberg admits that it’s unlikely that Apple would switch back to Intel processors in its devices, unless of course there is substantial strongarming by the Trump admin behind the scenes. The iPhone maker’s most sophisticated chips are now produced by partner Taiwan Semi and are much more powerful and energy efficient than comparable offerings by Intel, whose chips in recent years have tended to be energy-gobbling battery drains. 

Intel’s new CEO Lip-Bu Tan is attempting a comeback with the backing of the federal government. In an unconventional deal brokered by the Trump administration in August, the US acquired a roughly 10% stake in the chipmaker. Intel is seen as a critical piece of efforts to reinvigorate domestic production, a priority for the White House. 

Apple, meanwhile, has sought to show that it’s investing in the US — even as much of its production remains overseas. At a White House event in August, the company announced plans to spend $600 billion on domestic initiatives over a four-year period, up from a previous pledge of $500 billion. The centerpiece of the expansion was a $2.5 billion investment in Corning, Apple’s longtime glass supplier.

In an interview with CNBC’s Jim Cramer, Apple CEO Tim Cook said the investments would encourage other companies to add US production, creating a “domino effect.”

Shares of Intel rose as much as 8% to $31.70 in New York after Bloomberg News reported on the discussions. Apple was down less than 1% at $252.29.