Apple-Intel Chip Pact Pressures Taiwan Semiconductor as Shares Rally 47%
TSM•Apple has agreed to collaborate with Intel on domestic chip design and manufacturing, signaling potential diversification away from Taiwan Semiconductor due to capacity constraints and lifting Intel shares over 9% in premarket trading. Taiwan Semiconductor has surged 47% over six months, trading at a 13% premium to the sector median P/E and earning a Strong Buy rating on the back of robust AI-driven earnings growth.
1. Apple and Intel Collaborate on Domestic Chip Production
President Trump announced that Apple will work with Intel to co-design and build chips within the United States, marking a key move away from overseas foundries and seeking to alleviate reliance on Taiwan Semiconductor due to its current capacity limits.
2. Implications for Taiwan Semiconductor
The agreement underscores Apple’s strategic push to diversify its chip supply chain and may reduce future wafer orders from Taiwan Semiconductor, potentially pressuring TSMC’s utilization rates and revenue growth trajectory.
3. Taiwan Semiconductor’s Valuation and AI Demand
Despite the Apple-Intel development, Taiwan Semiconductor’s stock has climbed 47% in six months, supported by accelerating AI-driven earnings and a modest 13% premium to the sector median P/E, prompting analysts to maintain a Strong Buy outlook.
