Apple has entered into a multi-year, multi-billion dollar agreement with chipmaker Broadcom to source chips made in the United States. While the exact financial terms were not disclosed, Broadcom indicated that the new agreements require it to allocate "sufficient manufacturing capacity and other resources" to Apple. This deal follows a previous $15 billion, three-year agreement between the two companies that was set to expire in June.
The collaboration will see Broadcom develop 5G radio frequency components, including FBAR (film bulk acoustic resonator) chips, and other cutting-edge wireless connectivity components. These FBAR filters, crucial for connecting iPhones and other Apple devices to mobile data networks, will be designed and built in various US facilities, notably Broadcom's major factory in Fort Collins, Colorado. Apple stated that it currently supports over 1,100 jobs at Broadcom’s FBAR filter manufacturing facility in Fort Collins.
This investment is part of Apple's broader commitment, made in 2021, to invest $430 billion in the US economy over five years through direct spend with American suppliers, data center investments, and capital expenditures. Apple CEO Tim Cook emphasized the company's belief in America's future and stated, "All of Apple’s products depend on technology engineered and built here in the United States, and we’ll continue to deepen our investments in the U.S. economy." The announcement positively impacted Broadcom's shares, which rose 2.2% to a record high, as the deal removes an "overhang," according to Bernstein analyst Stacy Rasgon.
Broadcom is already a significant supplier to Apple, with approximately one-fifth of its revenue in its two most recent fiscal years coming from the iPhone maker. This deal also aligns with Apple's strategy of diversifying its supply chain, which includes building more products in India and Vietnam and sourcing chips from a new Taiwan Semiconductor Manufacturing Co plant under construction in Arizona. Past investment pledges by Apple, reaching up to $600 billion in total domestic investment commitment, have included partnerships with companies like Corning, Applied Materials, Texas Instruments, GlobalFoundries, Broadcom, and Samsung.
