Intel and Apple Discussed Possible Partnership for Mobile Chip Deal

Intel’s move to make chips designed by chipmaker Altera spurred talks about a possible Apple deal, which could pave Intel’s road into the mobile arena, Reuters suggests.


Citing a source close to one of the companies, Reuters says both Apple and Intel executives have discussed the terms of a deal in the past year, but no agreement has been reached.

“If you can have a strategic relationship where you’re making chips for one of the largest mobile players, you should definitely consider that. And for Apple, that gets them a big advantage.” said Pat Becker Jr, of Becker Capital Management, which owned about $39 million worth of Intel shares at the end of last year.

Intel has designed its own computer CPUs, which clients like Apple integrate into their products, but the company sees an opportunity to fill its idle production lines and earn new revenue as PC sales drop and its fabrication plants operate in reduced capacity.

Speculations about a possible Apple-Intel deal rose after Intel announced that it will increase its capital spending budget by $2 billion to $13 billion this year. The news came hot on the heels of earlier rumours of Apple moving away from Samsung as its supplier due to the fierce competition between the two, and the patent battle they carry in US courts.

The potential of the deal is huge for Intel, as its chip manufacturing technology is “at least two years ahead” of Taiwanese foundry TSMC or Samsung. Critics emphasize, though, that Intel’s “x86” chip architecture is better suited to PCs and servers than to mobile gadgets.

“This is potentially huge,” said JMP analyst Alex Gauna. “The new CEO will have a very large opportunity to take this to the next level. Those discussions about taking on Apple as a foundry customer are going to be very complex and very contentious.”

One thing is certain though: With the appearance of the A6 and A6X chips, Apple has shown it isn’t producing placeholders while waiting for an Intel processor.