Apple Inc’s push to replace the chips inside its devices with homegrown components include dropping a key Broadcom Inc part in 2025, dealing a blow to one of its biggest suppliers, people familiar with the situation said.
As part of the shift, Apple also aims to ready its first cellular modem chip by the end of next year or early 2025, letting it swap out electronics from Qualcomm Inc, the people said.
Apple had previously been expected to replace the Qualcomm part as soon as this year, but development snags have pushed back the timeline.
Photo: Reuters
Apple is Broadcom’s largest customer and accounted for almost US$7 billion, or about 20 percent, of the chipmaker’s revenue in the past fiscal year.
Nearly US$10 billion, or 22 percent of Qualcomm’s annual sales were from the iPhone maker, although the company has for years said that its Apple reliance would wane.
The moves are to further upend a chip industry that makes billions of US dollars supplying Apple components. Already, the world’s most valuable tech company has removed most Intel Corp processors from its Mac computers, opting instead to use in-house chips known as Apple Silicon. Now the changes are hitting the biggest makers of wireless electronics.
The iPhone is Apple’s top moneymaker, generating more than half of its US$394.3 billion in revenue last year.
The phone also has helped fuel growth at Broadcom Inc, which refers to Apple as its “large North American customer” during earnings calls. The chipmaker makes a combined component that handles Wi-Fi and Bluetooth functions on Apple devices.
Apple is developing an in-house replacement for that chip, and is aiming to start using it in its devices in 2025, the people said.
In addition, it is already working on a follow-up version that would combine cellular modem, Wi-Fi and Bluetooth capabilities in a single component.
A representative for Cupertino, California-based Apple declined to comment, while Broadcom did not have an immediate comment.
Broadcom still supplies Apple with other components, including radio frequency chips and ones that handle wireless charging, although the iPhone maker has been working on customizing those parts as well.
Qualcomm declined to comment beyond pointing to previous remarks that it has made on the topic.
With the shift away from Qualcomm modems, Apple plans to initially just use its homegrown component in one new product, such as a high-end iPhone model. It aims to gradually move away from Qualcomm modems during a period it anticipates would take about three years — similar to how it handled past transitions.
However, the swap has not been easy so far. After aiming to launch its own cellular modem by this year, the company faced problems with overheating, battery life and getting the component validated. The iPhone currently works with more than 100 wireless carriers in more than 175 countries, which necessities a lengthy and cumbersome testing process.
A cellular modem is what allows iPhones to handle phone calls and connect to the Internet while away from Wi-Fi, making it the most critical part of the device for most people. If Apple’s offering is inferior to Qualcomm’s component, it could put the company’s flagship product at a significant disadvantage.
The long transition also could put Apple in a tricky position. The company would still need to rely on Qualcomm for several years as it replaces the component in various devices.
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