Broadcom, Apple chip deal extended through 2031

Broadcom said Monday it has agreed to expand its partnership with Apple through 2031 to develop and supply custom chips, a move that eased concerns about the iPhone maker's reliance on the chipmaker and sent Broadcom shares up nearly 4% in premarket trading.

It is important to note that Broadcom has been supplying Apple with vital components, including RF chips that are used for cellular, Wi-Fi, and Bluetooth connectivity, as well as other networking semiconductors.

The revenue generated from sales to Apple amounts to about 20% of Broadcom's total annual income, as per analysts. This shows the company to be among the largest customers of Broadcom, even though Apple has managed to develop its own set of chips, such as C1 modem.

However, while the next-gen modems will be introduced in the iPhone 18 Pro and iPhone Ultra, a contract with C1 to maintain Broadcom as a partner until 2031 shows that Apple does not intend to rely on self-developed components for the radio part any time soon.

The first Apple C1 modem appeared in the iPhone 16E, with the C1X following in the iPhone Air and iPhone 17E. Neither of the two supports mmWave 5G, a variant of 5G used in stadiums and airports.

Inference through artificial intelligence, in which machine learning models answer queries from users, has increased the importance of dedicated computer chips.

Although Apple still makes its proprietary M-series and A-series chips using Taiwanese company TSMC, the capacity of TSMC to supply has been stretched due to growing orders from AI chip manufacturers such as Nvidia, according to Apple's CEO Tim Cook.

Apple is also in discussions with Intel to manufacture some chips domestically, though analysts say volume production there remains unlikely before late 2027.