Broadcom is consolidating its role as a key supplier to Apple. The US semiconductor company will continue to supply the iPhone manufacturer with customized chips for another five years. The partnership between the two companies extends until 2031. Broadcom announced this on Monday.
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According to the Reuters news agency, the agreement shows that “despite Apple’s own efforts to develop modems and processors, it continues to rely on Broadcom for complex, customized semiconductors.” At the same time, the deal allays possible concerns among investors that Apple could replace Broadcom chips with its own in the near future. The agreement gives both Apple and Broadcom planning security. Broadcom already supplies Apple with important components such as high-frequency chips for the iPhone’s cellular connection as well as chips for WLAN and Bluetooth connectivity and other network semiconductors. The chip manufacturer generates a good fifth of its annual sales from deliveries to Apple.
Both companies have already signed a multi-billion dollar agreement in 2023 for Broadcom to develop and manufacture 5G radio frequency components. Recently, the global AI boom has increased demand for powerful processors and increased competition.
By far Apple’s largest chip supplier is and remains the Taiwanese contract manufacturer TSMC. Apple relies on the world market leader for its processors, including the M series for Mac computers and the A series for iPhones. However, this is heavily utilized due to the sharp increase in demand from AI chip manufacturers such as Nvidia. TSMC can hardly keep up with chip production. Many tech companies are therefore trying to diversify their supply chains so as not to be dependent on a single manufacturer. Apple is no exception. In May it was announced that, after long negotiations, Apple and Intel had apparently agreed to have Apple chips produced by Intel again in the future.
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