WASHINGTON (dpa-AFX) - Broadcom (AVGO) has decided to continue its partnership with Apple (AAPL) all the way through 2031, focusing on the development and supply of custom semiconductor chips.
This move solidifies Broadcom's role as one of Apple's key technology partners. Following this news, investors felt relieved and pushed Broadcom's stock up by over 3%, while Apple saw an increase of more than 1%.
Broadcom is responsible for providing essential components to Apple, which includes radio frequency chips that enable cellular connectivity, Wi-Fi, Bluetooth, and other networking hardware. Analysts say that Apple accounts for roughly 20% of Broadcom's yearly revenue, so this long-term deal is crucial for both companies.
Earlier this year, they had already inked a major multibillion-dollar deal for Broadcom to develop and produce 5G radio frequency components.
This updated partnership is coming at a time when the demand for custom chips is skyrocketing, largely driven by the rapid growth of artificial intelligence applications. While Apple is busy designing its own A-series and M-series processors, it still relies on key suppliers for specialized silicon.
Taiwan Semiconductor Manufacturing Co. is Apple's main chip manufacturer, but supply issues have arisen due to the soaring demand for AI.
Apple is also looking into manufacturing options in the U.S. with Intel, but experts believe that large-scale production is still a few years off.
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