Broadcom Extends Chip Supply Agreement With Apple to 2031, Rising Over 4% Premarket

TradingKey - On July 6, Eastern Time, Broadcom ( AVGO) submitted a filing to the U.S. Securities and Exchange Commission (SEC), disclosing that it has entered into a multi-year agreement with Apple ( AAPL) to extend their technical collaboration through 2031.

Under the agreement, Broadcom will develop and supply a range of custom ASIC chips for multiple generations of Apple products, including iPhone RF chips, Wi-Fi and Bluetooth connectivity chips, and other networking semiconductors. Following the announcement, Broadcom's stock price jumped over 5% at one point in U.S. pre-market trading. As of press time, Broadcom was up 4.30% pre-market, trading at $375.96 per share.

[Source: Futu]

Apple is one of Broadcom's most important customers. Analysts estimate that Apple contributes approximately 20% of Broadcom's annual revenue. This renewal aligns with Apple's consistent practice of securing key chip suppliers through long-term agreements to stabilize its supply chain.

The long-term partnership between the two companies has a well-established foundation. In 2023, they announced a multi-billion dollar agreement for Broadcom to develop and manufacture 5G RF components for Apple. Prior to that, Broadcom had already been a major supplier of wireless connectivity chips, such as Wi-Fi and Bluetooth, for Apple.

In recent years, Apple has continued to push forward with its in-house chip development. From its A-series processors and M-series computer chips to the newly introduced C1 cellular modem, its core computing power and communication basebands are gradually being replaced by self-developed solutions. However, in the fields of RF front-ends and wireless connectivity, Apple still chooses to remain deeply tied to Broadcom. Broadcom has accumulated deep expertise in analog chips and RF technology, establishing a clear technological advantage that is difficult for Apple to fully replace in the short term. This choice is based on practical considerations.

With the growing demand for AI inference, market demand and industry competition in custom chips are both on the rise. Broadcom's long-term positioning in the custom chip space, coupled with its stable partnership with Apple, constitutes a highly robust segment of its current business.