Intel (INTC), Apple (AAPL) May Enter 'Win-Win' Foundry Deal Soon

March 7, 2013 10:14 AM EST
Intel (Nasdaq: INTC) could potentially step out of its comfort zone, which may be a boon for investors.

According to Reuters, citing sources on the issue, Intel might be venturing further into the contract manufacturing business. The move might also land Intel a partnership with Apple (Nasdaq: AAPL), which has been discussed over the past year with no formal deal inked yet.

The move for Intel comes as PC growth has been nonexistent over the last few years. With Dell (Nasdaq: DELL) looking to go private, Microsoft (Nasdaq: MSFT) offering discounts, and Hewlett-Packard (NYSE: HPQ) admitting that a turnaround won't happen until 2014 at the soonest, the move shouldn't be a surprise. In addition, Intel hasn't moved hand-over-fist to gain a stronghold in the mobile device market, which is largely dominated by names like Qualcomm (Nasdaq: QCOM) and ARM Holdings (Nasdaq: ARMH).

Intel upped its capital spending plans by $2 billion to $13 billion for 2013 to aid in the transition. Speculation surrounded whether Apple would tap Intel to produce chips for its iPad and iPhone, which would help Apple end its foundry relationship with Samsung, a company it has been in legal struggles with for well over a year.

Complicating the issue is that Apple's A-series chip sets use ARM-based designs, which competes with Intel's own architecture.

Intel's relationship with Microsoft has also come under strain as sales of Windows RT and Windows Pro Surface tablets are said to be lagging expectations. Intel and Microsoft largely dominated the PC marketplace for most of the 1990s and 2000s, up until the shift to tablets and smartphones really took off in 2011.

Shares of Intel are up about one percent Thursday, while Apple trades lower.

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scott on 2013-03-07 19:50:33
Mark as Spam | Reply to this comment

what is the point of this article????

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