Foreign media including Reuters reported on the 6th (local time) that Apple and Broadcom extended their custom semiconductor supply agreement through 2031.
Broadcom said the same day, "We signed a new agreement with Apple and decided to extend our cooperation on application-specific integrated circuit (ASIC) development through 2031," adding, "These chips are slated to be installed in multiple generations of Apple products going forward."
The deal eased investors' concerns that Apple would soon replace Broadcom components with its own chips. At the same time, analysts said it reaffirmed that Broadcom remains a key supplier to Apple in custom semiconductors. Boosted by the news, Broadcom shares rose about 4% that day.
Apple is expanding in-house semiconductor design, unveiling its self-developed C1 and C1X cellular modems. However, wireless connectivity and radio frequency (RF) components supplied by Broadcom are still widely used in Apple products. Broadcom supplies custom RF components as well as Wi-Fi and Bluetooth connectivity chips and other networking semiconductors, and Apple is known as one of its largest customers, accounting for about 20% of Broadcom's total revenue.
Jacob Bourne, an analyst at market research firm eMarketer, said, "By maintaining its partnership with Broadcom through 2031, Apple secured stability in its semiconductor supply chain while reducing the burden of having to develop key iPhone components in-house," adding, "Broadcom likewise resolved much of the uncertainty stemming from Apple's expansion of in-house chip development."
Earlier in 2023, the two companies also signed a multibillion-dollar supply agreement under which Broadcom would develop and produce 5G radio frequency (RF) components for Apple.