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Apple Inc.’s push to replace the chips inside its devices with homegrown components will include dropping a key Broadcom Inc. part in 2025, according to people familiar with the situation, dealing a blow to one of its biggest suppliers.
As part of the shift, Apple also aims to ready its first cellular modem chip by the end of 2024 or early 2025, letting it swap out electronics from Qualcomm Inc., said the people, who asked not to be identified because the plans are private. Apple had been previously expected to replace the Qualcomm part as soon as this year, but development snags have pushed back the timeline.
Apple is Broadcom’s largest customer and accounted for about 20% of the chipmaker’s revenue in the last fiscal year, amounting to almost $7 billion. Qualcomm got 22% of its annual sales from the iPhone maker, representing nearly $10 billion, though that company has warned for years that its Apple reliance will wane.
Shares of Broadcom fell as much as 4.7% on the news before paring their decline. The shares closed at $576.89, down 2%. Qualcomm slid as much as 1.6% before closing at $114.61, down 0.6%. Apple rose 0.4% to $130.15.
The iPhone is Apple’s top moneymaker, generating more than half of its $394.3 billion in revenue last year. The phone also has helped fuel growth at Broadcom, which refers to Apple as its “large North American customer” during earnings calls. The chipmaker makes a combined component that handles both 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’s already working on a follow-up version that will combine cellular modem, Wi-Fi and Bluetooth capabilities into a single component.
A representative for Cupertino, California-based Apple declined to comment. Broadcom didn’t have an immediate comment.
Broadcom still supplies Apple with other components — including radio-frequency chips and ones that handle wireless charging — though the iPhone maker has been working on customizing those parts as well.
