Apple has formalized a multi-year, multi-billion dollar agreement with Broadcom to source chips made in the United States. While the exact financial terms of this new deal were not disclosed, a previous three-year agreement between the two companies was valued at $15 billion and was set to expire in June. Analysts believe this new arrangement is positive for Broadcom, securing its position as a key supplier for Apple's products.
Under the new multi-year agreements, Broadcom will develop and supply 5G radio frequency components, including film bulk acoustic resonator (FBAR) chips crucial for connecting iPhones and other Apple devices to mobile data networks. These components will be designed and manufactured in several U.S. facilities, including Broadcom's major factory in Fort Collins, Colorado, which currently supports over 1,100 jobs related to FBAR filter manufacturing. Apple CEO Tim Cook emphasized the company's commitment to investing in the U.S. economy and its domestic supply chain.
The deal was further expanded and solidified in July, with Broadcom announcing an agreement to extend its partnership with Apple through 2031. This expanded deal involves Broadcom developing and supplying a range of custom ASIC silicon products for use in multiple generations of Apple products. This move provides Apple with supply-chain certainty amidst chip scarcity and demonstrates Apple's continued reliance on Broadcom for complex custom silicon, despite its efforts to design some components in-house. Broadcom, which derives approximately 20% of its annual revenue from Apple, saw its shares rise by over 3% following the announcement, hitting a record high, while Apple’s shares also increased by more than 1%.
