Executives from both firms have discussed the issue in the past year but no agreement has been reached.
Apple is reportedly in talks with Intel to manufacture mobile chips. The firm currently sources its chips from it's rival Samsung.
Under the anticipated deal, Intel would manufacture the iPhone maker's ARM-based smartphone chips in return for Apple deploying Intel's X86 processors in its new iPad devices, the reports revealed.
Intel revealed its plans to open up its new manufacturing technology for the production of chips designed by chip maker Altera, according to Reuters.
Additionally, the deal that would shift production of iPhone and iPad chips to Intel and is expected to add an additional $4.2bn in the chipmaker's revenue in 2015, along with a gross margin of about 50%.
The US chip manufacturing firm is currently not involved in manufacturing chips on behalf of other firms.
Apple and Samsung have been in ongoing patent lawsuits recently added Samsung's Galaxy Note smartphone and tablet computer to its ongoing patent lawsuits.
However, Apple won a $1.05bn verdict in August 2012 over the South Korean firm in a California trial court, in which the company sought a ban on several Samsung phones. The judge later dropped the award to $450m saying that jury miscalculated the damages Apple should receive.
