Intel shares surge 11% after Trump touts deal with Apple
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Intel shares surged 11% Thursday, continuing their meteoric rise after President Trump said that the company had secured a deal to supply chips to Apple.
Why it matters: Intel has been scrambling to reinvent itself as a chip foundry, making components for external customers — and its moment might've finally arrived in the form of a global shortage that's jolting device prices.
The big picture: Intel investors — and by extension, American taxpayers — have enjoyed a rollicking ride after the company last year gave the U.S. government a 10% stake at Trump's behest in exchange for CHIPS Act funding.
- The stock has soared about 6x over the last 12 months, making the company worth about $670 billion.
The latest: "Apple has agreed to work with Intel to design and build its Chips in America," Trump said early Thursday on Truth Social.
- He also bragged that the meteoric rise of Intel's stock had enriched the federal treasury by more than $60 billion: "When was the last time a President made America money??"
- Intel declined to comment. Apple reps did not immediately respond to a request for comment.
Zoom in: Investors knew that Apple and Intel were discussing a collaboration, but this looks "as official as things are ever going to be these days," Bernstein analyst Stacy Rasgon wrote in a research note.
- Any initial deal would likely involve small runs of lower-priority chips — with market speculation most centered on low-end PC components, he added.
- "Intel will of course have to prove their mettle before being granted more substantial wins, but the first step is always the hardest, so at least they appear to be taking that step," Rasgon wrote.
By the numbers: The opportunity is enormous as Apple ships about 25 million PCs annually — and global chip demand is outstripping supply by a long shot.
- Apple CEO Tim Cook told WSJ on Wednesday that the company will raise prices due to the soaring costs of memory and storage chips, which he called "unsustainable."
- "The current capacity crunch is probably emboldening customers to give Intel a harder look at this stage than perhaps they might ordinarily be inclined to do as the prospect of more advanced capacity will take on higher value in a constrained environment," according to Rasgon.
The bottom line: Intel's turnaround under CEO Lip-Bu Tan is looking more and more substantive.
