Apple’s Intel bet unlikely to dent TSMC, experts say

Taiwanese industry experts say Apple’s reported move to place select chip orders with Intel reflects supply-chain diversification and bargaining leverage rather than a serious challenge to TSMC dominant position in advanced chipmaking.

Intel’s potential comeback

Recent reports from multiple outlets, including Reuters, that Apple has reached a preliminary agreement with Intel for chip manufacturing have ignited speculation over whether the struggling American chipmaker may finally be mounting a comeback in the foundry race long dominated by Taiwan’s semiconductor titan TSMC.

Apple is reportedly considering using Intel to manufacture certain chips. The reports helped propel Intel shares to fresh highs, fueling broader market enthusiasm that the company’s years-long attempt to reinvent itself as a contract chip manufacturer may finally be gaining traction.

Some in Taiwan have been debating whether TSMC should be worried about such a development. Industry experts interviewed by TCN cautioned against overstating the implications for TSMC, arguing that the reported cooperation appears limited in scope and does not threaten the Taiwanese firm’s entrenched dominance in cutting-edge semiconductor manufacturing.

A tactical shift rather than a strategic overhaul

Chi Yu (游智瓊), former senior vice president for worldwide field service of ASML, said the reported order is unlikely to have meaningful short-term impact on TSMC’s business.

“TSMC already has more demand than it can handle,” Yu told TCN, noting that the chips reportedly involved are not Apple’s most advanced or strategically critical semiconductors.

Instead, Yu argued, the more consequential issue lies in bargaining dynamics.

For years, Apple has relied heavily on TSMC for the fabrication of its flagship chips, particularly the A-series processors powering iPhones and the M-series chips used in Macs. That dependency has given TSMC considerable pricing leverage due to its technological leadership in advanced-node manufacturing.

“Apple naturally wants alternatives beyond TSMC,” Yu said. “The bargaining power Apple has when negotiating with Intel is very different from the bargaining power it has with TSMC.”

According to Yahoo, Apple’s effort to cultivate a secondary supplier should not be viewed as unusual within the industry, but rather as a rational and even expected move for a company of its scale. Maintaining alternative manufacturing partners and pursuing additional foundry options allow Apple to secure greater flexibility and strengthen its negotiating position which could ultimately yield more favorable pricing and contractual leverage over time.

In Yu’s view, the reported arrangement reflects Apple’s broader effort to diversify suppliers and improve negotiating leverage rather than a fundamental shift away from TSMC.

Intel, meanwhile, has spent years attempting to establish itself as a major foundry player capable of manufacturing chips for external clients. Yu described Intel as “historically a strong company,” but said it has lagged behind TSMC in manufacturing yield and cost efficiency.

“The key question now is whether Intel can execute well and deliver,” he said. “If it can seize this opportunity successfully, it could attract more customers to follow Apple’s decision to go with Intel in the future. If not, it would be a challenge.”

Yahoo also cautioned that Intel’s longer-term prospects within Apple’s supply chain would ultimately hinge on execution. The key question is whether Intel can consistently deliver manufacturing quality that meets Apple’s stringent standards.

Intel’s long pursuit of Apple after rejecting it initially

Rocky Uriankhai (烏凌翔), CEO of the Taiwan-based SciTech Power Research, told TCN that the reported deal ought to be understood within a much longer historical arc.

Uriankhai noted that Intel’s relationship with Apple’s mobile ambitions stretches back nearly two decades. During the early development of the original iPhone in the mid-2000s, Apple reportedly approached Intel regarding system-on-chip (SoC) production, only to be rebuffed by then-CEO Paul Otellini, who underestimated the smartphone market’s potential.

Apple subsequently turned to Samsung Electronics before gradually shifting key chip production to TSMC. Following overheating issues associated with Samsung-manufactured A9 chips, TSMC became Apple’s sole manufacturer for the iPhone’s main A-series processors, beginning with the A10 Fusion chip used in iPhone 7. 

“Failing to enter the smartphone SoC market has always been Intel’s anguishing remorse,” Uriankhai said.

Still, he stressed that the current reports do not suggest Intel is taking over production of Apple’s most important chips, echoing what Yu said about the reported deal.

“Intel is likely only manufacturing certain non-core chips,” Uriankhai said. “This is not Intel suddenly replacing TSMC’s decade-long relationship with Apple.”

Washington’s industrial ambitions

Although Uriankhai agreed that TSMC’s business remains fundamentally secure for now, he argued that the development nonetheless carries broader geopolitical and industrial significance.

At minimum, he said, the reported deal suggests Intel may be gaining entry into Apple’s broader supply-chain ecosystem at a time when Washington is aggressively pushing to rebuild domestic manufacturing capacity.

“Intel and Apple are both flagship companies with American DNA,” Uriankhai said. “Even if this is only a small first step, it represents a symbolic counteroffensive in America’s effort to rebuild manufacturing.”

Uriankhai also highlighted Intel’s expanding ties with the US defense establishment. Over the past several years, Intel has secured support and contracts linked to multiple US government initiatives, including the Secure Enclave program under the Biden administration’s CHIPS and Science Act and Pentagon-related projects such as the RAMP-C program.

Conversely, Yu cautioned against reading excessive geopolitical implications into Apple’s reported order. He noted that the US defense sector has long preferred domestic production and historically maintained strict control over sensitive supply chains.

“This Apple order should not be viewed through such lens or overinterpreted as such,” Yu said.

Uriankhai argued that Washington’s strategic concerns over semiconductor supply chains must also be understood within the broader trajectory of American industrial history.

Over the past several decades of globalization, Uriankhai told TCN, large segments of US manufacturing — from textiles and footwear to steel, chemicals, automobiles, and semiconductors — steadily migrated overseas in pursuit of lower costs.

The defense sector, however, largely remained anchored within the United States under stringent Pentagon oversight, with even overseas component suppliers subjected to rigorous scrutiny. He further stated that Silicon Valley’s semiconductor industry itself was, in many ways, nurtured by US military investment during the 1960s and 1970s.

As chips have become increasingly indispensable to advanced weapons systems — with demand volumes continuing to expand — Washington has grown deeply uneasy with the notion that critical defense-related semiconductor needs could depend so heavily on a single company located on an island thousands of miles away.

Uriankhai said that strategic anxiety formed one of the fundamental drivers behind US pressure for TSMC to establish fabrication capacity in the United States.

Pressure and opportunity for Taiwan

The broader trend may still place increasing pressure on Taiwan’s semiconductor sector as Washington pushes for more localized production capacity, Uriankhai said.

Uriankhai argued that regardless of which political party governs Taiwan, Taipei will likely have limited room to resist American pressure encouraging Taiwanese firms to expand manufacturing operations in the United States.

On the bright side, Uriankhai said, the US market is indeed significantly huge. He added that Taiwan’s industry faces challenges in terms of land, electricity, water, labor, and talent. Going to the US may be a way to counter that, Uriankhai stated.

At the same time, he acknowledged that building fabs in America remains substantially more expensive than in Taiwan, with construction and operational costs estimated to be roughly triple those on the island.

For now, though, both experts agreed on one central point: Apple’s reported engagement with Intel does not amount to a direct threat to TSMC’s commanding position at the apex of global semiconductor manufacturing.