Broadcom to remain Apple's chip partner until 2031

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Broadcom has been supplying Apple with key wireless chips for years. Now, the two companies have extended their collaboration until 2031 – even though Apple is increasingly developing its own semiconductors. For Broadcom, the deal is a billion-dollar transaction; for Apple, it's proof that its own chip offensive has clear limits.

Apple has made significant efforts in recent years to become less dependent on suppliers like Qualcomm and to design key components in-house. This makes the recently announced contract extension with Broadcom all the more remarkable: According to a Reuters report, the two companies are extending their chip partnership until 2031. The deal covers the development and delivery of a wide range of custom chips – and demonstrates that Apple will continue to rely on external specialists for certain components.

What the new contract covers

The extension builds on an existing supply agreement that has been in place for several years. Specifically, it concerns custom high-frequency components, chips for Wi-Fi and Bluetooth connections, and other network semiconductors found throughout Apple's product range. Broadcom develops some of these components specifically for Apple, which is why the two companies cannot easily terminate their partnership.

The contract is part of a longer history. Back in 2023, Apple and Broadcom signed a multi-billion dollar agreement for 5G high-frequency components manufactured in the US. This new commitment extends that agreement until 2031, thus providing a long-term framework for the collaboration.

Proprietary chips, yes – but not everywhere

At first glance, the announcement seems contradictory. Apple now designs its own cellular modems – the C1 and C1X chips in the iPhone Air, iPhone 16e, and iPhone 17e are the first examples – and intends to gradually extend its own modem technology to the entire iPhone lineup. So why a long-term contract with a chip supplier?

The answer lies in the division of labor. Apple's own development has so far focused on modems, while many of Broadcom's wireless connectivity and RF components remain in use. These niche markets cannot be replaced overnight: Developing specialized wireless components is expensive and time-consuming, and only worthwhile where Apple sees sufficient volume and strategic benefit. For everything else, purchasing from a specialist remains the faster and safer option.

A billion-dollar deal for Broadcom

Apple is one of Broadcom's most important customers. It is estimated that the company accounts for around 20 percent of the chip manufacturer's annual revenue. The stock market reacted accordingly: Broadcom shares rose by almost four percent in pre-market trading after the contract extension was announced. A multi-year commitment provides Broadcom with planning security from a customer whose order volumes shape entire fiscal years.

Apple's chip price until 2031

The contract extension shows that Apple's path to greater independence in chip development is not an all-or-nothing proposition. While the company is increasingly relying on its own developments for processors and modems, it will remain dependent on established partners for wireless and connectivity technology for the time being. Broadcom will thus remain firmly integrated into the inner workings of iPhones, iPads, and other Apple devices until at least 2031 – even though the back of these devices now bears the inscription "Designed by Apple." (Image: Shutterstock / Poetra.RH)