UPDATED 19:34 EDT / JANUARY 23 2020

INFRA

Broadcom signs multibillion-dollar deals to supply Apple with wireless components

Computer chipmaker Broadcom Inc. said Thursday it has inked two separate, multiyear deals with the iPhone maker Apple Inc. to provide it with high-performance wireless components and modules.

Broadcom said the new deals are in addition to an existing agreement it has with Apple to provide it with certain radio-frequency components that are also used in the production of iPhones.

Broadcom refused to provide any more specific details about the new agreements but said that when combined with the earlier deal, they should help to “generate aggregate total future revenue” of about $15 billion for the company. Furthermore, it said, the deals will apply to all of Apple’s products launched over the next three-and-a-half year period beginning this month.

The latest deals extend Broadcom’s yearslong relationship with Apple. The company has provided it with components needed to make its iPhones connect to cellular and Wi-Fi networks for more than a decade. In addition, Broadcom supplies Apple with touchscreen controllers and wireless charging modules.

“This is good news for Broadcom as it secures its long-term supplier relationship with Apple, allowing the vendor to plan capacity and business better,” said Holger Mueller, an analyst with Constellation Research Inc. “For Apple the deal means it secures a stable supply chain for critical components.”

News of Broadcom’s new deals comes several weeks after it was reported that the company was looking to sell off its RF business unit, with Apple mentioned as one possible suitor. The RF business is a carryover from Broadcom’s early days, when it focused on semiconductor chip development under its old name, Avago Technologies Ltd.

Analyst Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE that today’s deals are likely to involve Wi-Fi, Bluetooth or 4G RF technologies, and that any ambiguity over its exact nature is designed to mask the fact that it doesn’t involve 5G RF.

“Broadcom is trying to sell its wireless unit and likely pressured Apple to allow this disclosure due to that,” Moorhead said. “This move could stabilize the value of the unit as I have heard the price kept getting lowered due to Apple uncertainty. I wouldn’t be surprised if Apple ends up buying the unit to marry up with the modem unit it recently acquired from Intel.”

Photo: Petergibbons949/Flickr

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