Apple, broadcom lock in custom chip deal through 2031

Chipmaker Broadcom has announced that it has secured a massive partnership expansion with Apple to develop and supply custom chips through 2031. The extended agreement guarantees Broadcom's role as a primary supplier for the iPhone maker, easing Wall Street fears that Apple would completely phase out Broadcom components in favour of its own in-house technology, news agency Reuters reported.

The critical multi-year safety net

The deal represents a major “win-win” for both tech giants at a time when global chip supplies remain highly competitive. Apple currently accounts for roughly 20% of Broadcom's annual revenue, the report said. Previously, the two companies signed a multibillion-dollar deal in 2023 for 5G radio frequency components. This new extension ensures Broadcom will continue supplying vital parts, including radio frequency chips that connect iPhones to cellular networks, Wi-Fi and Bluetooth connectivity hardware and advanced networking semiconductors.“For Apple, locking in Broadcom through 2031 buys supply-chain certainty at a moment of chip scarcity, and spares Apple from having to in-source key iPhone components. For Broadcom, it provides reassurance given that Apple has spent years trying to build these chips itself,” said Emarketer analyst Jacob Bourne.The extension comes amid a massive industry boom in “inference” that has made specialised, custom chips absolutely critical, sparking a rush of orders across the tech industry.

Currently, Apple relies heavily on Taiwan's TSMC to manufacture its custom-designed A-series iPhone processors and M-series Mac chips. However, TSMC's factories have been stretched thin due to skyrocketing demand from AI powerhouse Nvidia. Apple CEO Tim Cook noted in April that these manufacturing bottlenecks had previously held back iPhone sales.By locking down Broadcom through 2031, Apple protects itself from these industry-wide shortages.