In a bid to diversify away from chips made in Asia, Apple announced a multi-billion-dollar multi-year deal with Broadcom to help the latter develop chips made in the US.
Apple released a statement on May 23 saying that the company is partnering with Broadcom to develop 5G radio frequency components, including FBAR filters, and cutting-edge wireless connectivity components, with the FBAR filters designed and made in several sites in the US, including Broadcom's facility in Fort Collins, Colorado. The statement did not specify the exact time frame and investment.
Apple CEO Tim Cook said in the statement that all of Apple's products depend on technology engineered and built here in the US and will continue to deepen investments in the US economy because Apple has an unshakable belief in America's future.
Apple emphasized its commitment to developing 5G technology, saying it announced a commitment in 2021 to invest US$430 billion over five years and has helped expand and expedite 5G adoption across the US.
As Apple keeps diversifying away from China and into India and Southeast Asia, Apple also said it would reduce its reliance on chips made in Asia and will source TSMC's chips made in Arizona.
Broadcom has been among Apple's top 200 suppliers for years. Reuters quoted Bernstein analyst Stacy Rasgon saying that both companies had a three-year, US$15 billion agreement that is reportedly set to expire in June, and the latest deal will help eliminate the uncertainties.
It remains to be seen what products will use the FBAR filters. Coinspeaker reported that these filters might be used in Apple Watches, and Dow Jones reported that it might be iPhone, iPad, and the rumored mixed relaity (MR) device adopting the filters.
Bloomberg Intelligence analysts Kunjan Sobhani and Nishant Chintala said in a research note that the deal should not have any detrimental effect on Qualcomm as Broadcom and Qualcomm supply different components to Apple.
Still, Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said that the deal indicates Apple's intentions to diversify its supply chain both from a vendor and geography perspective and could also mark a first step toward moving away from Qualcomm, the dominant provider of connectivity parts for Apple.
Qualcomm CEO Cristiano Amon told CNBC in March that the company may not supply 5G modem chips for iPhones from 2024.
