Apple turns to Intel to make chips for budget iPhones and iPads

Apple is bringing Intel back into its supply chain — not for CPU architecture, but as a chip manufacturer. After more than a year of negotiations, the two companies have reached a preliminary agreement to have Intel Foundry produce chips for lower-end iPhones, iPads, and Macs, per CNBC. Small-scale testing begins in 2026, with a production ramp planned for 2027 and peak volumes expected in 2028.

Why now

The short answer: TSMC is running out of room. Taiwan Semiconductor Manufacturing Company handles over 90% of Apple's chip orders, but AI workloads are crowding the queue. Companies like Nvidia are paying top dollar for priority access to the most advanced fabrication lines, and Apple doesn't want to be caught waiting. Analyst Ming-Chi Kuo, who first reported the deal details, notes that roughly 80% of Apple's Intel orders center on the A21 chip — likely destined for a future iPhone SE or continued production of older models sold in emerging markets. The remaining 20% covers M7 chips for Mac and iPad, plus specialty components.

The US government had a hand in pushing the deal along. Intel has received CHIPS Act funding and carries a government equity stake, making a high-profile Apple contract strategically useful beyond just the balance sheet, as EE Times notes.

Intel's proving ground

This is a make-or-break moment for Intel Foundry. The division has faced persistent skepticism after years of manufacturing delays. Its target yield rate on the 18A-P process node sits at 50–60% by 2027 — well below TSMC's 90%+ benchmark, but a meaningful milestone for a foundry still stabilizing its process. Apple is also reportedly evaluating Intel's other advanced process nodes, which hints at a deeper partnership if execution holds.

Even if everything goes smoothly, TSMC keeps more than 90% of Apple's business. Intel is not replacing anyone here — it's becoming a backup with leverage. That leverage matters: having a credible second supplier gives Apple a stronger hand in price negotiations with TSMC.

What this means for your next iPhone

Nothing changes for flagship buyers. The A-series and M-series chips powering Pro iPhones and MacBooks stay with TSMC. Intel's role is confined to the budget end of the lineup — the kind of hardware Apple sells to hold market share in price-sensitive regions. If Intel hits its yield targets and the partnership deepens, that could shift over time. For now, it's a supply-chain hedge, not a product story.