INTEL has approached Apple about securing an investment in the ailing chipmaker, according to people familiar with the matter, part of 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, said the people, who asked to not be identified because the deliberations are private. The talks have been early-stage and may not lead to an agreement, the people said.
Shares of Intel rose 6.4 per cent to US$31.22 in New York after Bloomberg News reported on the discussions. Apple was down less than 1 per cent at US$252.31.
Such a deal would follow a US$5 billion investment last week by Nvidia, which plans to work with Intel on chips for personal computers and data centres. SoftBank Group, the Japanese tech giant seeking to expand further in the US, announced a US$2 billion investment in Intel last month.
Intel also has reached out to other companies about possible investments and partnerships, the people said.
A deal with Apple, 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.
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Still, it’s unlikely that Apple would switch back to Intel processors in its devices. The iPhone maker’s most sophisticated chips are now produced by partner Taiwan Semiconductor Manufacturing Co.
A representative for Intel declined to comment. An Apple spokesperson didn’t respond to a request for comment.
Intel chief executive officer 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 per cent stake in the chipmaker. Intel is seen as a critical piece of efforts to reinvigorate domestic production – a priority for the White House.
Even with financial support, Intel’s challenges remain daunting.
The Santa Clara, California-based company has lost its long-held technological edge and ceded market share to rivals such as Advanced Micro Devices. Moreover, Intel has struggled to capitalise on booming sales of artificial intelligence gear – a specialty of Nvidia.
Once the dominant chipmaker, Intel now has a fraction of Nvidia’s sales and market capitalisation. It also has laid off workers and delayed factory expansion plans to cope with its deteriorating finances.
Still, investors have grown more optimistic about its prospects since the government infusion. The stock is up more than 50 per cent since the beginning of August.
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 US$600 billion on domestic initiatives over a four-year period, up from a previous pledge of US$500 billion. The centerpiece of the expansion was a US$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.” BLOOMBERG
