Apple, Intel Deal on the Way? (Update 1)

Updated from 9:00 a.m. EST to provide additional analyst comments in the tenth paragraph.

NEW YORK (TheStreet) -- Rumors continue to circulate about a deal in which Intel (INTC) will make chips for Apple's (AAPL) iPhone and iPad. It's not what you think though.

According to Reuters, Intel has spoken to Apple about manufacturing chips for Apple's iPhone and iPad as part of its burgeoning, foundry business. Intel's -x86 chips would not be inside the iPhone or iPad, but rather Intel would manufacture the A-series chips for Apple, as opposed to Samsung, which Apple is increasingly trying to move away from.

This is something TheStreet predicted would happen in 2013, though nothing is official as of yet.

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With the PC market stagnant and in decline and Intel's mobile business not taking off like it had hoped, many have said Intel has "lost the mobile race" to other semiconductor companies, such as Qualcomm (QCOM). Qualcomm, Broadcom (BRCM), Apple, Samsung and others all use intellectual property from ARM Holdings (ARMH), which holds a 90% market share in the smartphone market.

An Intel spokesman declined to comment on the speculation.

When Intel issued first-quarter guidance, it raised its capital spending budget to $13 billion, suggesting to some that it would be upping its foundry business, trying to get a piece of the Apple pie (pun intended).

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JPMorgan analyst Christopher Danely said he believes it could be big business for Intel, especially if it wins 50% of Apple's business. "[W]e believe Intel has a decent chance to land some of the business over the next few years. If Intel were to win 50% of Apple's foundry business, we estimate it would add $3.6 billion (6%) in incremental sales and $0.08 EPS (4%) in 2017," Danely said in a research note.

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