According to a source with inside knowledge, Intel is reportedly in talks with Apple to explore the possibilities of a potential partnership in which the chip manufacturer would produce chips to Apple specifications. The source, believed to be close to one of the companies, said both the firms have been discussing the matter over the past year, mulling an alliance whereby Intel would build ARM-based "system on chips" (SoCs) for Apple's iOS device lineup. The new development was revealed by Reuters, noting a deal has not yet been finalized.

"Intel's next CEO is likely to shepherd the top chipmaker into a growing contract-manufacturing business, a strategic shift that could lead to a deal with Apple Inc and give it a fighting chance to make inroads in the mobile arena," the report states.

The move is seen as a paradigm shift in Intel's business model, as it has so far been utilizing its manufacturing expertise in developing its own PC chips, superior to rival products. This would open a new revenue-making method for Intel, as it finds itself in a precarious situation now with PC sales drastically slowing and its fabrication plants operating at less than full capacity. Most importantly, such a deal would take Intel into large-scale production of chips for mobile devices, a market segment where the company has made little headway.

However, this is not the first time the rumors about an Apple-Intel partnership pop up in the global media. There were reports back in May 2011 that Intel is interesting in manufacturing Apple's A4 and A5 SoCs.

If the current discussions reach an agreement, it would help Intel expand its business and would help the company to keep pace with a quickly changing market.

"It is a bet that analysts say is necessary if Intel wants to remain a top player. The company believes that taking on more contract manufacturing business will not only help fill an upcoming generation of production lines, but help pay for the cost of research to upgrade them," Reuters notes.

While the move proves good for Intel to strengthen its market position, it might be positive for Apple as well, given the fact that the company now relies on its rival, Samsung, for its mobile silicon.