Report: Apple and Intel have discussed chip fabrication deal


— 9:03 AM on March 7, 2013

Back in December, Credit Suisse analyst John Pitzer argued that Intel should strike a manufacturing deal to produce chips for Apple. Piper Jaffray & Co. analyst Gus Richard did the same thing as early as 2011. Neither of those reports cited sources indicating that a deal was being discussed—just that one would make sense, given the positions of the two companies. Now, however, a Reuters report quotes a "source close to one of the companies" who claims Apple and Intel have discussed chip fabrication "in the past year."

An agreement hasn't been reached, according to the source, and it's unclear whether the discussion was a one-time affair or something that's ongoing. There does appear to be some supporting evidence for a potential partnership, though. Reuters says it spoke to Sunit Rikhi, the head of Intel's Custom Foundry business, and was told the division is ready to take on a "large, unidentified mobile customer."

Naturally, Apple and Intel have declined to comment directly on the prospect of a deal. The analysts are predictably chiming with their own thoughts, pointing out that the successor to outgoing Intel CEO Paul Otellini will have to decide how much to expand Intel's Custom Foundry business. The chip maker reserves much of its fabrication capacity for its own processors, but it has inked small contracts with other companies, including a recent one with Altera to manufacture FPGAs on a 14-nm process.

Obviously, partnering with Apple would be a much bigger deal, especially since Intel would presumably be fabbing SoCs that ultimately compete with its own mobile chips. That may not be a bad way for Intel to hedge its bets, and it will be interesting to see whether the two can come to terms. Apple certainly isn't allergic to working closely with competitors; its SoCs are currently manufactured by smartphone rival Samsung. Intel has done custom work for the Mac maker before, too. It crafted a smaller CPU package specifically for the MacBook Air, an admittedly less involved venture than fabricating custom silicon.

   
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