Apple dodged even higher iPhone prices with Intel chip deal under tariff threat

The chip manufacturing deal between Apple and Intel may have been signed under duress as the White House administration wanted to impose 100% tariffs on the silicon it uses in iPhones and Macs otherwise.

Not that this precluded Apple from raising the price of its phones and laptops anyway, but if their processors were slapped with 100% import tariffs, the devices would have been even more expensive.

According to sources close to President Trump's administration, Apple's CEO Tim Cook asked for an exemption from the punitive semiconductor tariffs and got one only after he promised to relocate the production of some of its custom chips to Intel's foundries in the US.

The U.S. government became a large shareholder in Intel after a $9 billion investment last August and immediately started looking at ways to throw its pet project some business, cajoling companies to sign acquisition or manufacturing deals with Intel. In the case of Apple, the sweet talk apparently included a tariff threat indeed, and the White House got its way, making the Apple-Intel manufacturing agreement public in June.

So far, reporting points to Intel's 18A-P node handling entry-level Apple chips, with combined annual shipments of up to 20 million units. While that is a meaningful win for Intel’s foundry and the U.S. government’s investment there, it is nowhere near enough to dent TSMC's dominance. TSMC is still expected to retain more than 90% of Apple's chip supply, meaning flagship silicon for the iPhone and Mac Pro lineups will almost certainly stay on TSMC's cutting-edge nodes for now. 

Industry talk also suggests that Apple's A21 iPhone chips could shift to Intel's 14A node in 2028. If this pans out, that would become a much more serious foundry commitment. For now, Intel looks set to become a second-tier supplier of some of the cheaper processors that Apple uses and has evidently done it to placate the White House administration rather than genuinely consider a TSMC replacement.