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Apple Chip Production Deal Represents Big Opportunity For Intel, Wedbush Says

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Apple Chip Production Deal Represents Big Opportunity For Intel, Wedbush Says

Apple's (AAPL) chip production deal with Intel (INTC) represents a big opportunity for the semiconductor manufacturer, Wedbush Securities said in a note on Thursday.

President Donald Trump announced on social media that Apple had agreed to work with Intel to design and build chips in the US.

Neither of the two companies responded to' requests for comment.

Apple was considering engaging Intel and Samsung for producing device chips in the US, diversifying beyond long-time partner Taiwan Semiconductor Manufacturing Co. (TSM), Bloomberg News reported in May.

Intel's shares surged 9.2% in Thursday trade, and are up 258% year to date. Apple was up 0.8%, and has gained nearly 10% this year.

"After Apple transitioned away from Intel chips for its own in-house Apple Silicon, the company will now do a significant portion of deals with Intel in the coming years," Wedbush analysts including Dan Ives wrote.

Apple's US manufacturing represents "a huge opportunity for Intel, with Apple now going into this (three to four) year (artificial intelligence)-driven device cycle," Ives said.

The new partnership will reduce the iPhone maker's reliance on Asian factories, according to Wedbush.

Apple Chief Executive Tim Cook told The Wall Street Journal that price increases "are unavoidable" amid surging memory costs, as reported by the Journal on Wednesday.

"We believe (Apple) is in a strong position to increase prices without sacrificing hardware performance and risking increasing customer churn given the company's increasing focus on the higher-end consumer," Ives said.

Wedbush maintained an outperform rating on Apple's stock with a $400 price target.

In April, Apple reported fiscal second-quarter results above Wall Street's estimates driven by iPhone revenue beat. Separately, Intel posted stronger-than-expected first-quarter results as it benefited from AI-driven demand for its products.

Price: $296.89, Change: $+0.94, Percent Change: +0.32%

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