Broadcom and Apple extend chip supply agreement until 2031, Broadcom stock price jumps more than 5%
Broadcom said on Monday it had agreed to work with The partnership has been expanded and extended until 2031 to develop and supply custom chips for the latter. Broadcom shares surged more than 5%. The chipmaker has long supplied Apple with key components, including radio frequency chips used in iPhones to connect to cellular networks, Wi-Fi and Bluetooth connectivity chips and other networking semiconductors. Analysts say Broadcom gets about 20% of its annual revenue from Apple, one of its largest customers. Although Apple is developing its own chips, including the C1 modem, it still relies on Broadcom to supply wireless and radio frequency components. The extension of this partnership further solidifies Apple’s strategy of signing long-term supply agreements with major chip manufacturers to enhance supply chain resilience. Daniel Newman, CEO of technology research firm Futurum Group, said: "For Broadcom, this is equivalent to a five-year annuity from the world's most demanding customers, coupled with the increase in volume from hyperscale cloud service providers. Regardless of how the artificial intelligence (AI) cycle develops, Broadcom can benefit." The two companies announced a multi-billion-dollar agreement in 2023, with Broadcom responsible for developing and manufacturing 5G radio frequency components. It is discussing producing some chips in the United States, but analysts say large-scale mass production is unlikely to be achieved before the end of 2027.