Apple signs multi-billion-dollar deal with Broadcom

Apple has entered into a multibillion-dollar deal with chipmaker Broadcom to use chips made in the United States. Under the multiyear deal, Broadcom will develop 5G radio frequency components with Apple that will be designed and built in several US facilities, including Colorado, where Broadcom has a major factory.  

Broadcom shares were up 2.2% after the announcement, hitting a record high. The chipmaker is already a major supplier of wireless components to Apple. About one fifth of its revenue has come from the iPhone maker in its two most recent fiscal year. 

Apple has been steadily diversifying its supply chains, building more products in India and Vietnam and saying that it will source chips from a new Taiwan Semiconductor Manufacturing Co plant under construction in Arizona. 

Though the size of the deal has not been disclosed, Broadcom says that the new agreements require it to allocate Apple "sufficient manufacturing capacity and other resources to make these products." 

Broadcom and Apple previously had a three-year, USD 15 billion agreement that is set to expire in June. According to an analyst, the development was positive for Broadcom, despite the fact that the two firms did not give a time frame for how long the work will last. 

Apple said it will tap Broadcom for what are known as film bulk acoustic resonator (FBAR) chips. The FBAR chips are part of a radio-frequency system that helps iPhones and other Apple devices connect to mobile data networks. 

“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 CEO Tim Cook said in a statement. 

Apple said it currently supports more than 1,100 jobs in Broadcom’s Fort Collins FBAR filter manufacturing facility.