July 6 (Reuters) - Broadcom said on Monday it has agreed to expand its partnership with Apple through 2031 to develop and supply custom chips, easing concerns over the iPhone maker's reliance on the chipmaker.
The chipmaker, whose shares jumped nearly 4% in premarket trading, has been supplying key components to Apple for a very long time, including radio frequency chips used in iPhones for connecting to cellular networks, Wi-Fi and Bluetooth connectivity chips and other networking semiconductors.
Apple accounts for about 20% of Broadcom's annual revenue, according to analysts, making it one of the chipmaker's largest customers. Despite developing its own chips, including the C1 modem, Apple relies on Broadcom for wireless and radio-frequency components.
The extended partnership reinforces Apple's strategy of locking in long-term supply agreements with key chipmakers to bolster the resilience of its supply chain.
The companies had in 2023 announced a multibillion-dollar agreement for Broadcom to develop and manufacture 5G radio frequency components.
The boom in inference - the process by which models respond to user queries - has made custom chips crucial, increasing the orders for advanced processors and intensifying competition.
Apple relies on Taiwan's TSMC, the world's largest contract chipmaker, for its in-house processors, including the M-series chips that power its Mac computers and the A-series chips in iPhones.
TSMC has been stretched thin by surging demand from AI chipmakers such as Nvidia, which Apple CEO Tim Cook said in April had held back iPhone sales.
Apple is also in discussions with Intel to manufacture some chips in the U.S., though analysts have said volume production is unlikely before late 2027.
The company was forced to raise prices of its MacBooks and iPads in June as memory chip costs surged as much as 98% in early 2026, driven by AI datacenter demand.
(Reporting by Akash Sriram and Anhata Rooprai in Bengaluru; Editing by Shinjini Ganguli and Arun Koyyur)
