Apple agreed to let Intel build iPhone and Mac chips — in exchange for a tariff exemption

Tim Cook spent the summer of 2025 in Washington scrambling to save Apple’s supply chain. The Trump administration was preparing to slap import tariffs as high as 100% on semiconductor products — a move that would have sent the cost of every iPhone and Mac soaring. Cook needed an exit. What he found was Intel.

The Wall Street Journal reported Thursday that Apple’s successful bid for a semiconductor tariff exemption came with a specific condition attached: the company had to commit to using Intel’s struggling US fabrication plants to produce some of its chips. During meetings with Cook, President Trump and Commerce Secretary Howard Lutnick directly brought up Intel. Apple ultimately agreed to let the chipmaker handle manufacturing for some Mac laptops and iPhone models. The connection between that agreement and the tariff negotiations had not been previously disclosed.

The timing lines up. In August 2025, shortly after the Apple-Intel arrangement took shape, the Trump administration converted a $9 billion federal grant into a 10% equity stake in Intel, making the US government the company’s largest shareholder. From there, the dominoes fell fast: Nvidia, SoftBank, and other firms piled in with investments or partnership deals.

Trump later posted on Truth Social that Apple would start using chips made by Intel, adding that the US needs to “design and manufacture chips on American soil.” Intel shares hit an all-time high on the announcement.

The whole episode reveals how far the US government is willing to go to rebuild domestic chip manufacturing — and what it extracted from the world’s most valuable company to make it happen.

Intel has been pushing a foundry transformation under CEO Lip-Bu Tan, who took over in March 2025. Since Tan took the reins, the stock has more than quadrupled. He cut costs, streamlined product lines, and refocused the company on contract chipmaking for external clients. In September 2025, Nvidia committed $5 billion for custom data center chips built by Intel. In April 2026, Elon Musk’s TERAFAB project tapped Intel for high-performance chip design, manufacturing, and packaging.

The US Commerce Department has stayed in close contact with Intel’s management, tracking progress on advanced manufacturing processes, foundry operations, and packaging technology. Washington has been pushing Intel to expand its advanced packaging capacity in New Mexico — a direct play to compete with TSMC, the world’s largest dedicated chip foundry. Intel’s CFO David Zinsner has said packaging could eventually generate billions in revenue.

Advanced packaging — stitching together multiple smaller chips into a single package — is increasingly important for high-performance computing and AI workloads. If Intel can make that work at scale, it gives the company a genuine differentiator.

But the foundry business is still bleeding money. Intel’s foundry division has racked up $10.4 billion in cumulative operating losses over the past several quarters. Some potential customers have questioned whether Intel can deliver at the volume and consistency they need. Scott Lincicome, a trade and industrial policy expert at the Cato Institute, has warned that if Intel can’t turn things around, the government’s deep involvement could become a liability rather than an advantage.

There are signs of life. In April 2026, Intel reported that data center CPU revenue was up 22% year-over-year to $5.1 billion — driven by demand for AI-capable server chips. The company still posted a $3.7 billion net loss for the quarter, but the direction of travel is shifting. Google Cloud placed a large order for Intel Xeon processors in April to handle enterprise AI workloads. Mark Lohmeyer, Google Cloud’s head of AI and compute infrastructure, said Intel has gotten better at listening to customer needs, which strengthened the case for continuing the partnership.

For Apple, the deal is a calculated trade-off. The company gets tariff relief and a politically defensible supply chain story. Intel gets a marquee customer and a demonstration that its foundry business can attract the biggest names in tech. Whether Intel can deliver at the speed and scale Apple demands is the open question — but for now, both sides have reason to make it work.