Apple locks up supply of important iPhone components through 2031
With some components hard to find thanks to AI demand, Apple locks up supply from Broadcom through 2031.
Apple inks new supply deal with Broadcom through 2031 | Image by PhoneArena
Apple iPhone users want to be able to use the device to connect to others. For that, they have to thank Broadcom, the tech firm that supplies Apple with important Radio Frequency (RF) components that block interference from making it hard to hear calls made over 5G or LTE.
Apple debuted its homegrown Wi-Fi/Bluetooth N1 chip last year
Broadcom also supplies Power Amplifiers that boost the radio signals from the iPhone to cellular towers, making sure that even when far from a base station there is a connection. Besides components used for wireless connectivity, Apple also obtains power management chips from Broadcom.
The iPhone 17 Pro RF Board. | Image by analogxtech
Apple did include its homegrown N1 Wi-Fi/Bluetooth chip supporting Wi-Fi 7 and Bluetooth 6 in all iPhone 17 series models. This replaced the Wi-Fi/Bluetooth chips made by Broadcom used in the iPhone 16 line. Before the iPhone 17 series, every previous iPhone ever made, from the original iPhone to the iPhone 16 line, was equipped with a Broadcom Wi-Fi/Bluetooth chip.
Apple still needs Broadcom to supply it with RF front-end components
Despite replacing Broadcom with the homegrown N1 chip, Apple still needs the company to provide it with Radio Frequency (RF) front-end components such as antenna filters and amplifiers. These are used by Apple's C-series modems.
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Apple and Broadcom agree to extend their partnership through 2031
With this in mind, Apple and Broadcom agreed to continue their partnership through 2031. Apple is responsible for 20% of Broadcom's revenue, according to analysts, and investors were concerned that this revenue would disappear if Apple were to make components that would completely replace the ones designed by Broadcom.
Apple gets something too, out of this agreement according to Emarketer analyst Jacob Bourne. He says that by locking in Broadcom through 2031, Apple has some supply chain certainty at a time when certain components are scarce and are hard to find thanks to heavy AI-related demand. Bourne adds that it also takes away the pressure on Apple of having to create in-house versions of certain Broadcom chips.
With Apple signing this deal with Broadcom, the latter has at least five more years of producing chips for the iPhone. Broadcom investors were so happy to hear about the deal with Apple that they sent the stock up $13.45 or 3.73% higher on Monday to close at $373.90. For its part, Apple also had a good day, rising $4.03 or 1.31% to close at $312.66.
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