Broadcom announced on Monday its agreement to extend partnership with Apple until 2031 for custom chip development. This decision alleviated concerns over Apple’s dependency on Broadcom and triggered a nearly 4% rise in Broadcom shares during premarket trading.
Broadcom has been providing crucial components to Apple, such as RF chips used for cellular, Wi-Fi, and Bluetooth connectivity, along with other networking semiconductors. The revenue from sales to Apple accounts for roughly 20% of Broadcom’s annual income, according to analysts.
This indicates Broadcom is one of the company’s largest customers despite Apple’s ability to produce its own chips like C1 modem. However, upcoming modems in iPhone 18 Pro and Ultra will still require a contract with Broadcom until 2031, showing Apple’s commitment not to rely on self-developed radio parts anytime soon.
Apple’s first C1 modem was introduced in the iPhone 16E, followed by C1X in the iPhone Air and iPhone 17E. Neither supports mmWave 5G, a form of 5G used in stadiums and airports.
The demand for dedicated computer chips has surged due to advancements in artificial intelligence, where machine learning models respond to user queries. Despite continuing to produce proprietary M-series and A-series chips with TSMC, Apple’s capacity to supply has been stretched by increasing orders from AI chip manufacturers like Nvidia, as per Apple CEO Tim Cook.
Apple is also considering discussions with Intel for domestic manufacturing of some chips, though analysts suggest full-scale production in this regard remains unlikely until late 2027.