Apple and Intel team up again "Guo Mingchi, the 'Prophet of the Apple Chain', predicts that the 18A-P will test low-end chips."

Media reports have cited sources revealing that Apple Inc. (AAPL.US) and the American chip manufacturing giant Intel Corporation (INTC.US) have reached a preliminary agreement for chip manufacturing cooperation. An Apple Inc. industry chain analyst, who is closely followed by investors, believes that this deal may significantly favor relatively low-end chips for iPhones. TF International Securities analyst Ming-Chi Kuo posted on social media platform X that this deal may focus on "relatively low-end and legacy" chips for the iPhone, iPad, and Mac series of Apple Inc. products, using Intel Corporation's 18A-P series chip manufacturing process. He also mentioned that these chips will utilize Intel Corporation's exclusive Foveros advanced packaging technology. As Apple Inc.'s revenue heavily relies on iPhone sales, Kuo believes that about 80% of the orders will be focused on the iPhone product line, reflecting Apple Inc.'s end-device sales mix. According to the latest media reports, these two companies are actively collaborating again after many years, with small-scale manufacturing tests expected to take place this year, and production capacity ramping up in 2027 and 2028, followed by a slight decline in 2029. Kuo added that the iPhone manufacturer is also currently "actively assessing" other advanced process node technologies from Intel Corporation. If Apple Inc. does indeed test some of its low-end/legacy chips for iPhone, iPad, and Mac in Intel Corporation's 18A-P + Foveros manufacturing/advanced packaging system as reported in the media, it shows that Intel Foundry (i.e. Intel Corporation's chip manufacturing business) has received early validation from one of the world's most discerning chip customers, which is crucial for its long-term external client acquisition and rebuilding the foundry narrative. Apple Inc. is expected to showcase its Apple Intelligence key updates based on Gemini and the AI Siri super AI voice assistant at the WWDC (Worldwide Developers Conference) in June. Apple Inc. is currently undergoing a thorough reconstruction of the Siri voice assistant based on cutting-edge artificial intelligence technology, and plans to unveil the long-awaited first version of the Siri AI voice assistant at the global developer conference in June this year. The highly anticipated release of the new version of Siri is seen as a key counterattack from Apple Inc. amidst continuous updates and advancements from competitors like ChatGPT and Claude. For years, Ming-Chi Kuo has focused on research in the consumer electronics industry and Apple Inc.'s supply chain, accurately predicting the trends of Apple Inc.'s new generation iPhones, iPads, and consumer electronics product lines as well as the future technological landscape of the "Apple chain" (Apple Inc.'s supply chain). In 2020, Apple Inc. announced the transition of Mac to self-developed Apple Silicon, with the last Intel Corporation Mac Pro ceasing production in 2023, effectively completing the "public breakup" with Intel CPUs. However, this recent collaboration between the two companies suggests that Apple Inc. is not re-purchasing Intel x86 CPUs, but instead may have Intel Foundry manufacture some of its self-developed chips. The chip manufacturing renaissance narrative for Intel Corporation continues to gain momentum, but the real test will be in yield rates and mass production. Kuo further stated that it is still unclear when Intel Corporation's long-struggling chip manufacturing business will begin mass production and deliver chip manufacturing products to large American tech companies like NVIDIA Corporation, AMD, Broadcom Inc., and Apple Inc. The company aims to achieve a high-end advanced process yield rate of 50% to 60% by next year, followed by further improvements. In comparison, according to some industry analysts, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), known as the "king of chip manufacturing," currently has a yield rate of over 70% for its most advanced 2nm process nodes. Therefore, Kuo added that Apple Inc. may still heavily rely on Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR for the core chip manufacturing needs of the majority of its flagship products, with the proportion possibly reaching 90% or even higher. However, Apple Inc. has also recognized that due to the unprecedented AI spending boom that shows no signs of ending, the chip manufacturing capacity of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR may continue to shift towards core AI processors focused on massive AI workloads in data center CPUs and AI GPUs/TPUs. Regarding Intel Corporation's wild bull market trajectory this year, the dynamic news of Apple Inc. collaborating with Intel Corporation undoubtedly strengthens Intel Corporation's bull market narrative. After the news of Apple Inc.'s manufacturing collaboration with Intel Corporation came out, Intel Corporation's stock price surged by 19%, with a remarkable increase of 220% year-to-date, but it also significantly raised the performance realization threshold. In other words, Intel Corporation's stock pricing trajectory now not only focuses on the data center server CPU super cycle but also trades on a larger narrative of being the "second advanced manufacturing source for American tech giants"; however, if the 18A-P yield rates, production pace, customer shipping scale, or profit margin improvements fall short of expectations, this highly elastic bull market may quickly face pressure for a pullback.