An analyst at Piper Jaffray has made waves today suggesting that based on signals that he's seeing, Intel is making a play for Apple's foundry business.

The chain of speculation, first reported at the EET, goes something like the following: Apple is looking to get away from using Samsung to fab its A4 and A5 chips, because the Cupertino-based company is currently suing Samsung for allegedly ripping off elements of the iPhone and iPad. The most logical Samsung alternative is TSMC, and Apple probably is looking to source some of its production there, but TSMC is making ARM parts for everyone and their uncle, so there would be no hope of getting a process lead on the next guy. Enter Intel, which is a full process generation ahead of the ARM camp, and is already making chips for Apple's PCs. So why shouldn't Intel make Apple's A4, A5, and successor chips?

This is all fairly sensible, actually. But before we look at how likely it is, it's worth thinking about the larger context of this rumor.

First, take a look at Intel's share price. Despite a string of record-breaking quarters and a core product line that's stronger than it's ever been, INTC has basically gone sideways for the better part of the past decade, and no recent earnings blow-outs appear to be unable to put the price back on a strong upward trajectory. Contrast this with the price of ARM, which has tripled in the past year alone. NVIDIA also enjoyed some of the ARM halo effect for a while (it has been down since March).

But the point is that ARM has been on fire, while INTC has not, leading at least one analyst to write an open letter to Intel, begging the chipmaker to get back into the ARM business. The idea here is that if Intel could combine its process leadership with ARM's low-power designs, it could clobber the rest of the application processor competition, and its stock would explode upward, making all of the INTC longs happy.

So the reentry of Intel into the ARM market is an alluring fantasy that will probably grow in the collective mind of analysts until it either reaches the proportions of the pundit-fabricated Google/Apple team-up hysteria of 2006-7 (remember that?) and peters out, or it actually happens. The only way that the Intel/ARM dream can get any better is if you throw Apple into the mix, which is exactly what the Piper Jaffray analyst did.

So will it happen?

It may well be the case that Intel is pursuing Apple as a foundry customer, offering to fab the company's A4 and A5 chips. We think it's unlikely, but given that MeeGo has flopped, and Honeycomb, which is Intel's only hope for the tablet market right now, isn't exactly taking the world by storm, it wouldn't be shocking if it were true. The smartphone world is going through incredible upheaval right now—just look at what has happened at Nokia—so anything is possible.

If Intel is actually trying to score Apple as a foundry customer for ARM-based mobile chips, then it means that the company has given up on competing with Apple (for now) and decided that iOS is the only game in town. Better to hold its nose and fab Apple's ARM-based designs today, hoping to get an x86-based chip into a later iteration tomorrow, than to continue to invest in Android and MeeGo.

But will Apple take Intel up on the offer? This seems a bit less likely.

Intel is in the business of enabling Apple's competitors by handing them complete "reference designs" to productize, and the chipmaker would love nothing more than to drown the iPad in a wave of Atom-based tablets from ASUS, Lenovo, Dell, HP, Acer, and anyone else who wants to get in on the action. Apple knows this, and it makes Intel an even less attractive partner for them than Samsung.

But if Apple actually does use Intel as a foundry, then it signals that Cupertino is supremely unworried about competition from Intel's current and future tablet and smartphone reference designs. Apple would have to be quite optimistic that there's no advantage that Intel could get for its own tablet and smartphone efforts just by fabbing the application processors for iPhones and iPads.