Broadcom announced on July 6 that it will extend its partnership with Apple through 2031 to develop and supply custom chips, solidifying its role as a key supplier for the iPhone maker. This deal eases investor fears that Apple would in-source Broadcom's components in the near term and demonstrates Apple's continued reliance on Broadcom for complex custom silicon despite its efforts to design its own modems and processors. Broadcom's shares jumped more than 3% (up to 5% pre-market at one point) on the news, while Apple's shares rose over 1%.
This expanded agreement builds on a previous multibillion-dollar deal in 2023 for 5G radio frequency components. Broadcom has historically provided Apple with essential components such as radio frequency chips for cellular networks, Wi-Fi and Bluetooth connectivity chips, and other networking semiconductors. Analysts estimate that Apple accounts for approximately 20% of Broadcom's annual revenue. For Apple, this long-term agreement through 2031 offers supply-chain certainty during a period of chip scarcity and avoids the need to in-source critical iPhone components, according to Emarketer analyst Jacob Bourne.
Broadcom will develop and supply custom ASIC (application-specific integrated circuit) silicon products for use in multiple generations of Apple products, with a particular focus on those critical for artificial intelligence infrastructure. Apple is also planning to integrate Broadcom technology into its own AI server chips, codenamed Baltra, for deployment by 2027 to power cloud-based Apple Intelligence features. While Apple has been bringing some chip design in-house and recently rolled out its own combined Wi-Fi and Bluetooth chips in some products, Broadcom's specialized components, especially for cellular networking and custom ASIC silicon, remain vital.
This partnership provides reassurance for Broadcom, given Apple's past attempts to develop these chips internally. While Apple relies on TSMC for its in-house processors like the M-series and A-series chips, and is in discussions with Intel for some chip manufacturing, the Broadcom deal secures a longstanding and crucial supply relationship. The broader market for memory chips saw significant cost increases, up to 98% in early 2026, driven by AI datacenter demand, which led Apple to raise prices for MacBooks and iPads in June.
