Apple Signs Multi-Billion Dollar Deal With Broadcom For US Chips

Apple Store in Mumbai. Image credit: Apple

Apple expands its US chip sourcing with multi-billion dollar deal with Broadcom, as the iPhone maker defocuses from China

Apple has agreed a multi-billion dollar deal with chipmaker Broadcom, for components made in the United States.

Apple announced that under the terms of the multi year deal, Broadcom will develop 5G radio frequency components – including FBAR filters – and cutting-edge wireless connectivity components for the iPhone giant.

It comes after Apple in April 2021, announced it would invest $430bn (£346bn) in the US economy over a five year period which included direct spending with American suppliers. This would help Apple add 20,000 jobs for the United States.

Apple Store in Mumbai. Image credit: Apple
Apple Store in Mumbai. Image credit: Apple

Broadcom deal

Apple said that with this announcement, it is on pace to meet its target through direct spend with American suppliers, data centre investments, capital expenditures in the US, and other domestic spend.

Apple said that the FBAR filters will be designed and built in several key American manufacturing and technology hubs, including Fort Collins, Colorado, where Broadcom has a major facility.

“We’re thrilled to make commitments that harness the ingenuity, creativity, and innovative spirit of American manufacturing,” said Tim Cook, Apple’s CEO.

“All of Apple’s products depend on technology engineered and built here in the United States, and we’ll continue to deepen our investments in the US economy because we have an unshakable belief in America’s future.”

Apple said it already helps support more than 1,100 jobs in Broadcom’s Fort Collins FBAR filter manufacturing facility, and the partnership will enable Broadcom to continue to invest in critical automation projects and upskilling with technicians and engineers.

Apple also noted that across the United States Apple supports more than 2.7 million jobs through direct employment, developer jobs in the iOS app economy, and spending with more than 9,000 US suppliers and manufacturers of all sizes in all 50 states across dozens of sectors.

Apple is thought to already be Broadcom’s biggest customer. Before this deal, Apple reportedly accounted for 20 percent of Broadcom’s revenue in the last financial year, or nearly $7 billion (£5.7bn).

But it should be noted that Broadcom is also facing some challenges with Apple.

For example Apple is making more and more components inhouse. In January it was reported that Apple was planning to cease using a key Wi-Fi and Bluetooth chip from Broadcom in its iPhones in 2025.

Apple has been developing its first cellular modem chip for some time to replace a part from Qualcomm, and had hoped to begin using it this year, but has reportedly pushed the date back due to development hitches.

China pressure

Meanwhile Apple has been facing a great deal of pressure to reduce its reliance and spending on Chinese companies.

Last October Apple suspended plans to use memory chips from Chinese manufacturer Yangtze Memory Technologies Co (YMTC), after the firm was directly targeted by tougher US trade sanctions introduced that same month.

In December Apple reportedly began accelerating plans to shift production outside of China.

To this end Apple has increasingly turned to India, as it seeks to diversify away from China amidst increasing political tensions between the US and Beijing.

The company tripled its production to more than $7bn of iPhones in India last fiscal year, or 5 percent of worldwide iPhone production.

In March it was reported that Apple’s Taiwanese supplier Pegatron was in talks to open a second Apple factory in India.