Apple Inc. (AAPL.US) and Broadcom Inc. (AVGO.US) reveal details of a major custom ASIC agreement: worth over 30 billion US dollars, with "Made in America" 15 billion chips.

Apple Inc. (AAPL.US) announced on Wednesday that it has reached a multi-year agreement with Broadcom Inc. (AVGO.US) that is expected to exceed $30 billion. The two companies will collaborate to design and produce custom chip components and cutting-edge wireless connectivity technology for multiple Apple Inc. products. Under the agreement, Broadcom Inc. will manufacture over 15 billion chips in the United States, and invest $1.5 billion to expand and upgrade capacity at its factory in Fort Collins, Colorado. Broadcom Inc. filed documents with the U.S. Securities and Exchange Commission (SEC) on Monday, disclosing that the technology collaboration between the two companies will extend until 2031. Broadcom Inc. will develop and supply a range of custom ASIC (Application-Specific Integrated Circuit) chip products for multiple generations of Apple Inc. products. The financial details announced by Apple Inc. are a further complement to the arrangement announced by Broadcom Inc. on Monday. Fort Collins Factory: FBAR Filters and Advanced RF Components As part of the agreement, Broadcom Inc. will invest $1.5 billion to expand its manufacturing facility in Fort Collins, Colorado. The factory will produce advanced RF components, including Film Bulk Acoustic Resonator (FBAR) filters, and cutting-edge wireless connectivity technology. FBAR filters are crucial RF chips that help Apple Inc. devices achieve wireless communication, and Apple Inc. has been collaborating with Broadcom Inc. on this technology since 2023. These components are essential for achieving outstanding performance and connectivity on devices such as the iPhone and Mac. Apple Inc. CEO Tim Cook stated, "Apple Inc. and Broadcom Inc. have a long history of collaboration, and this new phase of cooperation further demonstrates our firm commitment to U.S. manufacturing and innovation." He added, "The cutting-edge components manufactured in Fort Collins are essential to providing customers with the performance and connectivity they expect. We are proud to deepen our investment in U.S. suppliers who are as dedicated to excellence and innovation as we are." Broadcom Inc. CEO Hock Tan stated that Broadcom Inc. is "honored to continue its relationship with Apple Inc. after several successful decades of collaboration." From RF Components to Custom ASICs: Strategic Upgrade of the Agreement The core upgrade of this agreement is the comprehensive expansion from traditional RF components to custom ASIC chips. ASICs are custom-designed chips for specific applications, and there is a growing demand for them in AI inference and high-performance computing. Broadcom Inc. has long been a key component supplier for Apple Inc., with products including custom RF chips for the iPhone, Wi-Fi and Bluetooth connectivity chips, and other network semiconductors. Analysts estimate that Apple Inc. contributes around 20% of Broadcom Inc.'s annual revenue, making it one of their most important customers. The signing of this ASIC agreement aligns with previous reports of Apple Inc. collaborating with Broadcom Inc. to develop AI server chips. Reports indicated that Apple Inc. is working with Broadcom Inc. to develop an AI server processor codenamed "Baltra," expected to be produced using Taiwan Semiconductor Manufacturing Co.'s most advanced N3P process and planned for mass production in 2026. This project aims to create custom AI chips for Apple Inc.'s internal AI workloads. Prior to this agreement, Bank of America Securities had suggested in a research report that Broadcom Inc.'s additional fifth AI ASIC customer "may be Apple Inc." The signing of the new agreement confirms this speculation. With Apple Inc. joining Broadcom Inc.'s roster of AI ASIC customers, Broadcom Inc.'s footprint in the custom AI chip sector expands further, already including top tech companies such as Alphabet Inc. Class C, Meta, ByteDance, and OpenAI. Broadcom Inc.'s Dual Drive: Apple Inc. Base and AI Growth For Broadcom Inc., this renewal goes beyond a typical supply contract. Firstly, it provides long-term revenue visibility. Apple Inc. contributes around 20% of annual revenue, and the stability of this key income source directly affects Broadcom Inc.'s valuation logic. Broadcom Inc.'s significant growth in recent years has largely been driven by its custom AI chip business according to their first quarter financial report, Broadcom Inc. holds over 70% of the market share in the custom AI chip market, with AI-related revenue reaching $8.4 billion, a year-on-year increase of 106%. Secondly, it validates Broadcom Inc.'s custom ASIC business model. Apple Inc.'s long-term commitment indicates that despite the trend of tech giants developing their own chips, Broadcom Inc.'s technological barriers and scale advantages in specific areas are irreplaceable. Broadcom Inc. is also deepening its custom AI chip business with Alphabet Inc. Class C and Anthropic in April of this year, Broadcom Inc. disclosed an agreement to develop the next generation Tensor Processing Unit (TPU) for Alphabet Inc. Class C, and provide network components for Anthropic's AI infrastructure until 2031. Additionally, this agreement also somewhat alleviates market concerns that arose from MediaTek securing orders for Alphabet Inc. Class C TPU. Extending their cooperation with Apple Inc. until 2031 signifies that Broadcom Inc.'s position in the AI era has evolved from a "connectivity chip supplier" to a "super platform AI computing infrastructure company with AI ASIC custom AI chips + network infrastructure + data center optical interconnect system". The key point for Apple Inc. is not simply to "ditch NVIDIA Corporation," but to build a more controllable, lower-cost, and ecosystem-adapted computing foundation for Apple Intelligence, cloud-based Siri, and future Baltra-like AI servers; while Broadcom Inc., leveraging Apple Inc.'s orders, combines the growth curves of consumer electronics terminals, edge AI, and cloud AI servers. J.P. Morgan estimates that Broadcom Inc.'s AI-related revenue will double to two to two and a half times by 2027, and double again in 2028. This implies that the market should not only see Broadcom Inc. as a "NVIDIA Corporation AI computing cluster replacement transaction," but rather as a core platform AI computing infrastructure supplier for AI ASIC outsourcing design, advanced packaging, SerDes, high-speed interconnects, and Ethernet cluster networks. Key Move in the $600 Billion U.S. Investment Plan This agreement is a significant component of Apple Inc.'s previously announced $600 billion, four-year U.S. investment plan. In August 2025, Cook and President Trump jointly announced the "American Manufacturing Program," pledging to invest $600 billion in the U.S. economy over the next four years. This investment plan covers research and development, chip engineering, software development, artificial intelligence, and machine learning, and is expected to create 20,000 direct jobs in the U.S. Apple Inc. stated that this agreement with Broadcom Inc. is the largest cooperation project to date under this plan. Other companies participating in Apple Inc.'s "American Manufacturing Program" include Corning Inc. (GLW.US), Global Foundries (GFS.US), and Texas Instruments Incorporated (TXN.US). Apple Inc. has been working with the U.S. government and businesses across the country to help establish end-to-end chip supply chains in the U.S., and this announcement marks further progress in those efforts. "Goodbye Mega Deal" on the eve of Cook's departure It is worth noting that the signing of this agreement comes at a crucial time as Apple Inc.'s leadership transitions. Cook will officially step down as CEO on September 1, 2026, and transition to Executive Chairman of the Board. John Ternus, the current Senior Vice President of Hardware Engineering, will succeed as CEO on the same day. This agreement is seen as one of the important steps taken by Cook before his departure to drive Apple Inc.'s supply chain strategic transformation. Cook will continue to stay on as Executive Chairman at Apple Inc., and it is expected that he will continue to manage the company's relationship with the White House. Ternus, as a hardware engineering executive, will be closely watched by the market for the direction of the supply chain strategy under his leadership. The new agreement indicates that Apple Inc. may not fully transition to in-house baseband chips before 2031, extending the timetable for self-replacement longer than anticipated by outsiders.