Apple Shares New Details Of Chip Supply Deal With AVGO – iPhone Maker Commits $1.5B To Expand Broadcom’s Manufacturing

• Broadcom previously disclosed in an SEC filing that the agreement with Apple will run through 2031.
• The details of the agreement come weeks after Apple raised prices across its product portfolio, except for the iPhone.
• Apple stated that the investment is part of its $600 billion commitment in the U.S. economy over four years, supporting manufacturing, job creation, and technology development across the country.

Apple Inc. (AAPL) on Wednesday shared crucial details of its new chip supply agreement with Broadcom (AVGO), which is expected to be north of $30 billion and will support the production of more than 15 billion chips in the U.S.

At the time of writing, AAPL and AVGO shares were trading down marginally in premarket trading.

AAPL-AVGO Agreement Includes $1.5B Investment

The company said the latest agreement includes a $1.5 billion investment to upgrade and expand Broadcom’s manufacturing facility in Fort Collins, Colorado.

Apple stated that the investment is part of its $600 billion commitment in the U.S. economy over four years, supporting manufacturing, job creation, and technology development across the country.

“With Apple’s newest commitment, we’re pleased to expand our manufacturing footprint in Fort Collins, where we create groundbreaking technology that connects people around the world,” said Broadcom CEO Hock Tan.

Broadcom previously disclosed in an SEC filing that the agreement with Apple will run through 2031.

What Will AVGO Manufacture For AAPL?

Broadcom will use the investment to produce advanced radio-frequency components — including FBAR filters — and wireless connectivity technologies at the Fort Collins facility, Apple said.

The details of the agreement come weeks after Apple raised prices across its product portfolio, except for the iPhone, in response to a memory and storage shortage driven by AI infrastructure-related demand.

Apple Is Acting Early To Avoid Supply Problems Later

Apple’s agreement with Broadcom is an indication that companies are acting swiftly to secure their respective supply of chips and components in response to the scarcity created by the aggressive buildout of data centers powering artificial intelligence. 

Recently, automakers like Ford and GM have also struck long-term pacts with Micron to ensure an uninterrupted supply of chips as automobiles increasingly integrate technology and AI.

Moreover, a Tuesday report from the Financial Times said Apple is testing Chinese DRAM chips for products intended for the Chinese market. The company is also trying to convince the U.S government to allow broader use of products made by ChangXin Memory Technologies, China’s largest DRAM manufacturer.

What Retail Traders Think About AVGO And AAPL

On Stocktwits, retail sentiment toward both stocks remained in ‘bearish’ territory over the last 24 hours.

AVGO shares have gained 35% so far this year, while AAPL has climbed 48%, outperforming the S&P 500.

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