Intel shares jump on reported chip production deal with Apple

Intel Corp. has reportedly inked a preliminary deal with Apple Inc. to produce chips for some of its devices.

The Wall Street Journal today cited sources as saying that the contract was signed in recent months. The companies reportedly spent more than a year working out the terms.

Shares of Intel closed 13.9% higher on the news.

The deal doesn’t come as a complete surprise. Last September, Bloomberg reported that the chipmaker had approached Apple about a potential investment. The proposed deal would have seen the iPhone maker not only buy Intel shares but also partner with its foundry business on chip production.

It’s unclear whether Intel’s new preliminary contract with Apple includes a funding component. The iPhone maker regularly invests in suppliers through an investment vehicle called the Advanced Manufacturing Fund. Last year, it made a multibillion-dollar commitment to support Taiwan Semiconductor Manufacturing Co.’s Arizona fab complex.

Today’s report didn’t specify what Apple devices will be equipped with Intel silicon. In November, prominent industry analyst Ming-chi Kuo stated that the chipmaker was expected to supply processors for the iPad Pro and entry-level MacBook Air. The two devices use Apple’s M series of custom chips. The chips combine a central processing unit, graphics card and artificial intelligence accelerator in a single package.

Apple uses TSMC’s most advanced manufacturing nodes to make iPhone processors. As a result, the company will presumably adopt Intel’s latest Intel 18A node, which recently entered production at its Arizona fab. Mass production is expected to begin next year.

The transistors in a modern processor resemble a miniature tower. The circuits that carry out processing account for only a small percentage of the tower’s height. The rest of the space is taken up by two sets of wires: power delivery links and interconnects that transport data traffic. Historically, both sets of wires were placed above the host transistor. 

One of the primary innovations in Intel 18A is that it moves the power delivery wires beneath the transistor. That leaves more room above the transistor for interconnects. The extra space enables engineers to place interconnects farther apart from one another, which reduces interference and thereby boosts performance.

Intel 18A not only spreads out the interconnect wires but also shortens some of them. The reduced distances enable data to reach transistors faster, which means that processing can begin sooner. The result is a further increase in performance.

According to CNBC, Apple is expected to use an enhanced version of Intel 18A called Intel 18A-P. The technology features a larger number of transistor varieties that customers can mix and match in their processor designs. According to Intel, 18A-P can provide 9% higher performance than the standard version of the node using the same amount of power.

Photo: Intel