Intel’s stock typically requires major news events or exciting market speculation to drive double-digit price increases. Wednesday brought a stock increase of 10.8% when DigiTimes Asia published an ‘exclusive’ report, which revealed that Nvidia and Apple planned to move a part of their chip production from Taiwan Semiconductor Manufacturing Company to Intel foundries.
This news provided long-suffering Intel shareholders with the best news they had received in months, which resulted in market reactions.
Not Replacing TSMC
People should stop making TSMC death predictions, because no one is replacing TSMC. The report shows that Nvidia and Apple will continue to use their main chip supplier TSMC for their production needs.
However, the main change occurs because technology companies now face increased demand in order to establish multiple supply routes, as the production costs continue to rise and the advanced manufacturing capabilities become more restricted.
So, both the companies would not be replacing TSMC and would rely on it, but for “low volume, low-tier, non-core” chips they would reach out to Intel. Apple may choose to use entry level M-series processors for their MacBook.
The result may lack excitement, but it still holds significance. Intel, after years of being treated as being invisible, gained a valuable achievement by securing a manufacturing partnership with Apple.
Nvidia’s Relationship with Intel
Nvidia maintains a strange partnership with Intel. Nvidia has invested a total of $5 billion into Intel stock. It seems like Nvidia is planning to make Intel’s foundry business operational and competitive enough to apply market pressure on TSMC.
DigiTimes reports that Intel may assist with Nvidia’s upcoming “Feynman” GPUs, which will require Intel to complete 25% of the work, while TSMC will handle the remaining 75% tasks. The collaboration between Nvidia and Intel, is a validation for Intel that its foundry business goes beyond the theoretical boundaries.
Market is Excited, but Caution is Necessary
Intel has been desperate for proof that its foundry turnaround story has real customers attached to it, and Apple and Nvidia are about as real as it gets. However, the issue is its timing. Intel maintains its financial losses, while its expenses increase and analysts predict this situation to continue until 2027.
The company plans to begin its collaboration with Nvidia on upcoming chips, which will not begin until 2028. Now, that is a really long wait for a market where the stock price increased by 10% because of positive news and market expectations.
Bottom Line
Intel stock increased in value when its narrative changed from an indefinite future possibility to a present-day potential. The potential of Apple and Nvidia to use Intel foundries for manufacturing purposes verifies the success of Intel’s operational recovery efforts.
However, the company’s credibility does not result in actual revenue, because its financial recovery requires more than just public enthusiasm. Intel’s current stock increase appears to investors as a temporary recovery rather than a beginning of long-term growth. The current situation brings back hope, but essential business operations still experience delays.