Apple buys Broadcom chips for $15 billion

On January 23, 2020 it became known of signing of the contract between Broadcom and Apple. Under the terms of the agreement, the semiconductor producer will deliver to the partner of a chip for wireless communication for the amount $15 billion. Agreement term — 3.5 years.

Cooperation it was announced in the documents sent to Securities and Exchange Commission (SEC). There it is not specified what components will be bought by Apple. 

Apple buys Broadcom chips for $15 billion

At the same time it is known that in smartphones iPhone 11  Broadcom chips are used to work in networks Wi-Fi and Bluetooth and also the radio-frequency chip under the name of Avago which helps devices to be connected to wireless networks.

According to the analyst of Moor Insight Patrick Moorhead, the agreement can assume that future Apple smartphones can be equipped with the Broadcom components for connection to LTE networks. As for 5G networks, the issue is completely not resolved. Earlier Apple purchased from Intel business on release of a 5G modems for smartphones.

Broadcom reported to SEC that the company signed with Apple two long-term agreements "on delivery of a number of the dedicated high-performance wireless components and modules held for use in products of Apple".

Contracts with Apple generated Broadcom about 20% of revenue in 2019. According to JP Morgan, in 2018 each iPhone contained the Broadcom components for $10.

It is expected that the big contract with Apple will push Broadcom to the accelerated search of buyers of the business connected with with development and production of radio-frequency components (filters and signal multipliers). The fact that the relevant division was offered for sale became known at the end of 2019.

In day, Broadcom announced about deliveries of chips for Apple, stocks of chipmaker rose in price for 3%.^[1]

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