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Broadcom will continue to supply Apple with its custom silicon till 2031 under the new long-term agreements agreed by the the two companies on Monday, locking in one of the chipmaker’s biggest revenue streams for the rest of the decade. The chipmaker’s shares surged by almost 4% in premarket trading after the news, according to Reuters.
Apple already accounts for about 20% of Broadcom’s annual revenue, according to analyst estimates cited by Reuters, so a renewal for many more years removes any question marks hanging over the chipmaker’s sales till the end of the decade, and puts investors at ease.
The two companies “have agreed to expand their long-standing technology collaboration through 2031 by entering into new multi-year long-term agreements for Broadcom to develop and supply a range of custom ASIC silicon products for use in multiple generations of Apple products,” an SEC filing from the company stated.
Broadcom products for Apple
Broadcom has multiple parts sitting in all sorts of Apple hardware. The company supplies custom radio frequency chips used in iPhones, along with Wi-Fi and Bluetooth connectivity components and other networking semiconductors.
This relationship has continued even though Apple now performs more and more chip design in-house. Apple now makes its own C1 and C1X cellular modems, which is part of a years-long push to control its silicon. However, it still leans on the chipmaker for wireless connectivity and RF work.
The deal’s renewal builds on a deal the pair previously signed in 2023. Under that previous multibillion-dollar agreement, Broadcom committed to developing and manufacturing 5G radio frequency components in the United States, including FBAR filters.
AI demand at the forefront of chipmaker deal
The deal extension fits a pattern of ensuring long-term supply with the chipmakers Apple depends on, which points to an attempt to hedge against the shortages and bottlenecks that have hit the industry in the past.
Demand for custom chips is running hot at the moment, and for Broadcom, this surge in AI needs has pushed orders for specialized processors higher and further increased competition among suppliers, Reuters reported. The chipmaker is chasing this market on multiple fronts, as it is also developing AI chips for Apple rivals Alphabet and Meta.
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