INTC Stock Hits New All-Time High After Intel, Apple Reportedly Reach Preliminary Chipmaking Agreement

• The development comes after Apple’s outgoing CEO, Tim Cook, lamented the lack of advanced chips, citing the company’s inability to meet iPhone demand.
• The Apple deal would provide a major boost to Intel’s Foundry unit, which had been underperforming for years.
• During the first quarter, Intel reported that its Foundry unit had an operating loss of $2.4 billion.

Intel Corp. (INTC) and Apple Inc. (AAPL) have reportedly reached a preliminary agreement under which Intel will manufacture some of the chips powering Apple devices.

According to a report by The Wall Street Journal citing people familiar with the matter, the two companies carved out a formal deal in recent months after undertaking talks for more than a year.

This comes after Apple’s outgoing CEO, Tim Cook, lamented the lack of advanced chips during the company’s previous two earnings calls, citing the inability to meet iPhone demand. iPhones are the company’s primary revenue generator, accounting for about 59% of Apple’s revenue in the first quarter (Q1).

Intel shares were up nearly 16% in Friday’s midday trade, paring some of the gains after hitting a new all-time high of $130.57. INTC was among the top trending tickers on Stocktwits at the time of writing.

Major Boost To INTC’s Foundry Unit

The Apple deal would provide a major boost to Intel’s Foundry unit, which had been underperforming for years.

During the first quarter (Q1), Intel reported that its Foundry unit had an operating loss of $2.4 billion.

Unlike rivals Nvidia Corp. and Advanced Micro Devices Inc. (AMD), which only design chips, Intel undertakes both the design and manufacturing of chips. However, Nvidia, AMD, and most other fabless chip companies outsource manufacturing to Taiwan Semiconductor Manufacturing Co. (TSMC).

This also includes Apple, which ships around 200 million devices across its ecosystem of iPhones, iPads, Macs, and more. With Apple using Intel to manufacture chips for some of its products, this would add a major customer to Intel’s Foundry unit.

This comes after Intel joined Tesla Inc.’s (TSLA) Terafab project in April this year to make processors to power the EV giant’s robotics and data center ambitions.

GOOGL Another Major Customer Of INTC’s Foundry Business

Alphabet Inc.’s (GOOG, GOOGL) Google is another major customer of Intel’s Foundry unit.

The two companies announced last month an expansion of their AI infrastructure collaboration to include multiple generations of Xeon processors.

Intel announced that the multi-year partnership with Google includes expanded co-development of custom ASIC-based infrastructure processing units (IPUs) to improve efficiency, utilization, and performance at scale.

How Did Retail Traders React?

Retail sentiment on Stocktwits around Intel trended in the ‘extremely bullish’ territory, with message volumes at ‘extremely high’ levels at the time of writing.

One user thinks INTC stock is still cheap given a 10-year outlook.

INTC stock is up 245% year-to-date, while AAPL stock is up 7%. The S&P 500 ETF (SPY) is up 30% over the past 12 months, while the Invesco QQQ Trust ETF (QQQ) is up 45%.

The Vanguard S&P 500 ETF (VOO) is up 31% during this period.

Also See: GRPN Stock Heads For Best Day In A Year Despite Earnings Miss — Here’s Why CEO Senkypl Is Confident About ‘Stronger Performance Ahead’

For updates and corrections, email newsroom[at]stocktwits[dot]com.