Apple Strikes Multi-Billion Dollar Deal with Broadcom to Diversify Supply Chain Outside of China

A multi-million dollar multi-year contract has led Broadcom to conquer all-time highs on the stock market. There are no figures or duration, but the client is known: Apple. The world’s most valuable private company relies on its neighbor in San Jose (California) for supplies and that has been enough to boost Broadcom’s price. With this contract, the iPhone manufacturer increases its supply from the United States with which it wants to be less dependent on foreign supply chains.

Broadcom, which is already a regular supplier to Apple, has risen 25% so far this year and has a market capitalization or market value of US$290 billion, more than the four largest Spanish companies (Inditex, Iberdrola, Santander and BBVA ) by market value together. Apple is worth $2.7 trillion.

Diversification

Through a statement, Apple has at least pointed out that these are contracts of several billion dollars.“Through this collaboration, Broadcom will develop 5G radio frequency components – including FBAR filters – and cutting-edge wireless connectivity components,” says the iPhone manufacturer.

FBAR filters are a type of high performance microchip specific for communications. They will be designed and built at several US technology and manufacturing centers, including Fort Collins, Colorado, where Broadcom has facilities.

“We are delighted to make commitments that harness the ingenuity, creativity, and innovative spirit of American manufacturing,” Tim Cook, Apple’s CEO, said in the statement. “All Apple products depend on technology designed and built here in the United States, and we will continue to deepen our investments in the American economy because we have unwavering faith in the future of the United States,” he adds in a message that is music to the ears. of Joe Biden, who successfully promoted a law in the first half of his term to promote investment in microprocessor manufacturing in the United States.

In order not to depend so much on China, Apple is also moving forward with a plan to increase the production of the iPhone in India

Commitment

Apple says the deal is part of a commitment it made in 2021 to invest $430 billion in the US economy over five years. Apple is currently on track to meet its target through direct spending on US suppliers, data center investments, investment and other spending, the company says, as it tries to reduce its dependence on China because of the risks posed by the tense relationship between the two superpowers.

Apple is Broadcom’s largest client and accounts for around 20% of its turnover. The company led by Tim Cook has considered developing its own microprocessors to replace those supplied by Broadcom (as it produces other of its computers, mobile phones, tablets and accessories), but this contract is an accolade for the manufacturer. Broadcom reached an agreement a year ago to acquire VMware in a deal valued at $61 billion in cash and stock. It is one of the largest purchases in the technology sector in its history.

If it goes ahead successfully, Broadcom would remove the thorn from the frustrated purchase of Qualcomm, which would have been the largest in the history of the sector and which was vetoed in 2018 by the Government of Donald Trump, who considered it a threat to national security. Despite being founded in the United States, Broadcom was headquartered in Singapore. Since then, he has relocated to San Jose, California, about 20 miles from VMware’s Palo Alto headquarters.

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