Apple NASDAQ:AAPL, the iPhone maker, has expanded its agreement with Broadcom NASDAQ:AVGO, a chipmaker that has long supplied Apple with wireless components, in a deal expected to exceed $30 billion. The agreement is expected to support the production of more than 15 billion chips in the US, while also backing hundreds of jobs and reinforcing Apple's broader push to increase spending on US-made components. Apple said the spending forms part of its previously disclosed $600 billion commitment to invest in the US.
The partnership includes a $1.5 billion investment in Broadcom's production plant in Fort Collins, Colorado, where advanced radio frequency components for wireless chips will be built. Apple also said it will help Broadcom upgrade its Colorado production facilities, adding more detail to the arrangement Broadcom announced Monday, when it said the pact would run through 2031 without providing financial terms. Tim Cook said Apple was grateful to President Donald Trump and his administration for supporting projects like this, while Broadcom CEO Hock Tan said the company was proud to continue working with Apple after decades of collaboration.
Investors may view the announcement as supportive for Broadcom after its shares rose as much as 5% to $389.12 in New York trading on Wednesday, while Apple shares were little changed at $310.09. The deal also appears strategically important because Broadcom continues to provide Apple with communication parts even after Apple moved some wireless chip designs in-house over the past year. Broadcom is also working on chip technology tied to Apple's effort to deploy its first dedicated artificial intelligence server as early as next year, while Cook is set to step down as Apple CEO on Sept. 1 and be replaced by longtime hardware chief John Ternus.