Apple and Broadcom have struck a “multi-billion dollar” deal that will see the chip company supply the iPhone maker with 5G components made in Colorado and other parts of the U.S., part of Apple’s push to buy more from U.S. factories part of the component.
Apple said the partnership, which centers on 5G radio frequency components and builds on its existing relationship with Broadcom, is part of its 2021 commitment to spend $430 billion over five years on U.S. suppliers and manufacturers.
Broadcom confirmed in a regulatory filing that it has entered into two “multi-year statements of work” for the supply of high-performance radio frequency and wireless components to Apple.
Shares of Broadcom rose about 1 percent to $682.82 in early New York trading following news of the deal. Apple shares fell 0.7 percent, bringing their year-to-year gain to 33 percent and a market value of $2.7 trillion.
Apple typically discloses little about the suppliers it works with, but the tech conglomerate has recently come under scrutiny for its reliance on Chinese manufacturers and components, and deteriorating U.S.-China relations could cause collateral damage for the Silicon Valley company.
Broadcom’s “cutting-edge wireless connectivity components” will be “designed and manufactured in several major U.S. manufacturing and technology centers, including Fort Collins, Colorado,” the iPhone maker said.
“All of Apple’s products rely on technology designed and manufactured in the United States,” Apple CEO Tim Cook said in a statement. “We will continue to deepen our investment in the American economy because of our unwavering belief in America’s future.”
Apple is Broadcom’s largest customer, accounting for about 20% of the chip group’s annual sales last year.
Hock Tan, the chipmaker’s chief executive, acknowledged in an interview with the Financial Times this year that Apple has been working hard to develop its own in-house wireless components to replace some of those supplied by Broadcom. However, he said he was “confident that I could out-engineer them”.
Since launching its first in-house designed iPhone processor in 2010, Apple has steadily expanded its silicon ambitions, adding its own chips to Macs as well as accessories like AirPods and the Apple Watch. Apple’s other wireless chip supplier, Qualcomm, said it expects the first iPhones without a 5G modem to arrive as early as next year.