Broadcom and Apple have agreed to extend their wireless chip supply partnership through 2031. The deal covers the development and supply of a wide range of custom chips, according to Reuters.
Apple is one of Broadcom’s largest customers, and is believed to account for about 20% of its annual revenue.
The chipmaker, whose shares jumped more than 5% in premarket trading today, has been a supplier of key connectivity components to Apple for quite a long time, including the radio frequency chips used in iPhones for connectivity to cellular networks, Wi-Fi and Bluetooth connectivity chips and more.
While Apple has been working to bring its connectivity chip design and manufacturer in-house, debuting its own C1 and C1X cellular modems in recent years, it continues to use several Broadcom wireless connectivity and radio frequency components in its devices.
The extended partnership is just one piece of Apple’s strategy of locking in long-term supply agreements with key chipmakers to keep costs down and reinforce the stability of its supply chain.
“For Broadcom, it’s a five-year annuity from the world’s most demanding customer, stacked on top of the hyperscaler XPU ramp. Broadcom wins either way the AI cycle breaks,” said Daniel Newman, CEO of tech research firm Futurum Group.
The companies in 2023 announced a multibillion-dollar agreement that would see Broadcom develop and manufacture 5G radio frequency components for use by Apple.
