Apple expands U.S. chip sourcing in multibillion-dollar Broadcom deal

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Apple and Broadcom have struck a “multibillion-dollar” deal for the chip company to supply 5G components made in Colorado and other parts of the US to the iPhone maker, as part of Apple’s push to source more parts from American facilities.

Apple it said the partnership, focused on 5G radio frequency components and building on its existing relationship with Broadcom, was part of its 2021 commitment to spend $430 billion with U.S. suppliers and manufacturers over five years.

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% in early trading in New York to $682.82 on news of the deal. Shares of Apple fell 0.7%, taking its earnings for the year to 33% and giving it a market capitalization of $2.7 trillion.

Apple typically reveals very little about the suppliers it works with, but the tech group has recently come under scrutiny for its reliance on Chinese manufacturers and components at a time when deteriorating US-China relations threaten to leave silicon companies behind. Valley as collateral damage.

The iPhone maker said Broadcom’s “state-of-the-art wireless connectivity components” will be “designed and built in several major American manufacturing and technology centers, including Fort Collins, Colorado.”

“All Apple products depend on technology designed and built here in the United States,” Apple chief executive Tim Cook said in a statement. “We will continue to deepen our investments in the US economy because we have unshakable faith in America’s future.”

Apple is Broadcom’s largest customer, accounting for about 20% of the group’s annual chip sales last year.

Apple had been working to develop its own internal wireless components to replace some of those supplied by Broadcom, the chipmaker’s CEO Hock Tan admitted this year in a interview with the Financial Times. However, he said he was “confident that we can engineer them.”

Since launching the first in-house-designed iPhone processors in 2010, Apple has steadily expanded its silicon ambitions, adding its own chips for Macs and for accessories like AirPods and Apple Watch. Qualcomm, another supplier of Apple’s wireless chips, said it expects the first iPhones to ship without its 5G modems as early as next year.