Apple Inc. (Apple (AAPL)) and Intel Corp. (Intel (INTC)) have reportedly reached a preliminary agreement for Intel to manufacture some Apple-designed chips. This move could reshape relationships across the semiconductor supply chain while easing Apple's growing dependence on Taiwan Semiconductor Manufacturing Co. Ltd. (TSM).

Taiwan Semiconductor stock traded lower in the premarket on Monday. In contrast, Intel traded higher in the premarket on the same day.

Apple Looks Beyond TSMC Amid AI-Driven Supply Constraints

People familiar with the matter told the Wall Street Journal on Friday that Apple and Intel finalized the framework of a deal after more than a year of negotiations. However, the companies have not disclosed which Apple products would use Intel-made chips.

Apple currently depends heavily on Taiwan Semiconductor to manufacture processors used in iPhones, iPads, and Macs. The company has recently faced supply shortages tied to surging industry demand for advanced semiconductors, particularly from artificial intelligence chipmakers such as NVIDIA Corp. (NVIDIA (NVDA)).

During Apple's recent earnings calls, CEO Tim Cook said shortages of advanced chips affected the company's ability to meet demand for certain products, including Mac Mini and Mac Studio models. Apple later raised the starting price of the Mac Mini.

Industry observers said Apple's move reflects growing pressure on Taiwan Semiconductor's production capacity amid surging demand for advanced AI chips, the Taipei Times reported on Monday.

President Capital Management Chairman Park Li told CNA that Apple's reported shift does not signal dissatisfaction with Taiwan Semiconductor's technology. Instead, he said soaring demand from AI chip customers such as NVIDIA has tightened Taiwan Semiconductor's advanced manufacturing capacity.

Analysts also noted that Apple wants to diversify manufacturing and expand U.S.-based semiconductor production as Washington pushes to rebuild domestic chip manufacturing capabilities.

Experts Say TSMC Still Holds A Strong Technology Lead

Taiwan Institute of Economic Research economist Arisa Liu said Taiwan Semiconductor's advanced packaging technologies, including InFO and CoWoS, remain essential for Apple's A-series and M-series chips.

Liu said Intel and Samsung Electronics Co., Ltd. (Samsung (SSNLF)) still trail Taiwan Semiconductor in chip yields and power efficiency, making it difficult for Apple to shift flagship chip production away from the Taiwanese foundry in the near term. She added that Apple and Taiwan Semiconductor have developed deep technological ties over many years, creating a significant competitive barrier.

According to Liu, Intel's 18A process and Samsung's 2nm gate-all-around technology still face challenges tied to yield stability and power consumption during large-scale manufacturing. She said Taiwan Semiconductor's stable delivery performance and research capabilities continue to strengthen its leadership position, while shifting major orders too quickly could create supply chain risks for Apple.

Intel Gains A Major Win In Its Turnaround Push

The reported Apple partnership marks a major milestone for Intel Foundry, which has struggled for years to attract large outside customers following manufacturing delays and technical setbacks.

Since becoming CEO in 2025, Lip-Bu Tan has aggressively reshaped Intel's leadership and manufacturing strategy. He recruited former Taiwan Semiconductor executive Wei-Jen Lo, reorganized Intel's product divisions, and increased investment in Intel's advanced 14A manufacturing process.

The Trump administration also played a central role in supporting Intel's turnaround. The U.S. government converted nearly $9 billion in federal grants into Intel equity last year, giving Washington a roughly 10% stake in the chipmaker.

According to people familiar with the discussions, Commerce Secretary Howard Lutnick repeatedly met with Apple CEO Tim Cook, NVIDIA CEO Jensen Huang, and Elon Musk to encourage partnerships with Intel. President Donald Trump also personally urged Cook to work with Intel during a White House meeting.

Price Action: Intel shares were up 5.16% at $131.36 and Taiwan Semiconductor shares were down 2.19% at $402.65 during premarket trading on Monday, according to market data.