The Untold Story of Intel's Failed Shot at iPhone Chip Production

2025-01-30

In a recent interview on the Acquired podcast, TSMC’s founder, Morris Chang, shared some fascinating insights into the company’s long-standing partnership with Apple. Among the most intriguing parts of the conversation, Chang revealed that there was a time when Apple considered Intel as a potential supplier for iPhone chips. However, the collaboration never materialized, and Intel’s attempt to produce chips for the iPhone ended in failure.

The Short-Lived Intel Opportunity

In February 2011, Apple allegedly considered shifting part of its iPhone chip production to Intel, which was still making chips for the Mac at the time. However, Apple CEO Tim Cook was not impressed by Intel’s trial phase for iPhone chips, and the company decided to pause discussions. Morris Chang recalled that Apple’s Jeff Williams communicated this to him, explaining that Intel had approached Tim Cook to consider taking on the iPhone chip production. But Chang, knowing Intel’s history with other customers, wasn’t worried. As he explained, by 2011, Intel no longer held the same dominance it once had.

Chang also recounted a conversation he had with Tim Cook at Apple’s campus, where Cook assured him that there was nothing to worry about because “Intel doesn’t know how to be a foundry.” Chang found this remark to be simple but reassuring.

Chang also reflected on Intel’s reputation among its customers, noting that Intel was not particularly well-liked. Many of Intel’s PC-making customers wished there was an alternative supplier for their chips, a sentiment that may have influenced Apple’s decision to bypass Intel in favor of TSMC.

What Undercode Says:

Intel’s failed attempt at securing Apple’s iPhone chip production provides a significant lesson about the evolving dynamics in the semiconductor industry and Apple’s long-term strategic vision. Here are some key takeaways:

1. The Rise of

Intel’s Reputation Problem: The fact that Intel’s customers in Taiwan felt that the company acted like a monopolist and didn’t provide the level of customer service they wanted was a significant red flag. This lack of customer-centric focus meant that even the possibility of Intel supplying Apple with iPhone chips was met with skepticism. Apple, known for its stringent quality control and attention to supplier relationships, saw no reason to risk such a critical partnership on a company that didn’t inspire confidence in its customers.
Apple’s Strategic Alignment: Apple’s decision to move forward with TSMC instead of Intel highlighted a broader strategy of aligning itself with a partner that could both meet its performance requirements and operate in a collaborative, customer-focused manner. TSMC’s emphasis on manufacturing excellence and its willingness to work closely with Apple was clearly the more attractive option. The tight integration of TSMC’s chip production with Apple’s design philosophy has been a key to the iPhone’s continued success.
Intel’s Lost Opportunity: Intel’s failure to secure the iPhone chip production deal with Apple marked a turning point in the company’s trajectory. It was a missed opportunity that could have significantly altered the competitive landscape of the tech industry. Had Intel succeeded in producing iPhone chips, it could have strengthened its position in the mobile market, potentially staving off the rise of ARM-based chip architecture and bolstering its semiconductor manufacturing dominance.
The Impact on the Semiconductor Industry: Intel’s inability to adapt to the foundry model paved the way for TSMC’s rise. In the years following 2011, TSMC took the lead in producing advanced chips for Apple and other companies, making it an indispensable player in the global semiconductor ecosystem. This shift also led to the growth of ARM-based chip designs, which now power many of the world’s most popular devices, including Apple’s iPhones and iPads.
The Importance of Adaptability: TSMC’s success in securing Apple’s iPhone chip business underscores the importance of adaptability in the tech industry. While Intel remained firmly rooted in its traditional approach, TSMC embraced change, taking the risks necessary to build a future-proof business model. This adaptability has allowed TSMC to thrive in the face of fierce competition.
Looking Forward: As the semiconductor industry continues to evolve, TSMC’s dominance in the foundry business remains unchallenged. However, Intel’s efforts to catch up with its Foundry Services business, including recent advancements like the development of 5nm chips, demonstrate that the company is far from giving up on competing in this space. However, whether Intel can ever recapture the influence it once held in the industry remains to be seen.

In conclusion, the episode where Apple considered Intel for iPhone chips and ultimately chose TSMC illustrates the critical importance of customer relationships, adaptability, and strategic vision in the high-stakes world of chip manufacturing. As TSMC continues to advance, Intel’s path forward will require significant changes to remain relevant in a landscape increasingly dominated by companies like Apple that value precision and collaboration.

References:

Reported By: https://9to5mac.com/2025/01/30/apple-gave-intel-a-shot-with-iphone-chips-but-they-failed-to-impress-tim-cook-per-tsmc/
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