Global News Business_Apple, the world’s most valuable technology company which revolutionized personal technology for nearly four decades took a bold step recently when it announced it will be dropping its key Broadcom chip for an in-house designed version in 2025. While a combination of the Wi-Fi and Bluetooth chip will replace the Broadcom chip, Qualcomm Inc.’s cellular modem chips will also be swapped for a homegrown modem.
According to Bloomberg News, Apple the world leader in innovation, accounted for about 20% of Broadcom’s net revenue and contributed at least 10% of Qualcomm’s revenue. Apple expected to replace the Qualcomm chip early this year but development challenges pushed back the timeline to end 2024 or early 2025.
When the news was announced, while Broadcom’s shares ended 4.7 percent lower, Qualcomm, which gains about 22 per cent of its annual sales from Apple – about USD 10 billion, saw its shares slide by as much as 1.6 per cent.
Apple is Broadcom’s largest customer accounting for 20 percent of its revenue (about USD 7 billion). The Company will however, continue to supply other components to Apple. The iPhone, which is Apple’s top seller generating more than half of its revenue which was posted at nearly USD 4 billion helped add fillip to Broadcom’s bottom line. However, Apple’s eventual plans include customizing the radio frequency chips and components that handle wireless charging which Broadcom currently supplies, phasing out its dependency on the chipmaker gradually.
Apple is on a mission to limit is reliance on external chipmakers and this is amply evidenced by the company using its own M1 line of chips known as Apple Silicon in its recent Mac computer models, to replace those from Intel Corp.
