Broadcom Apple Agreement
Broadcom says the two new agreements are in addition to an existing agreement with Apple in June last year. This agreement applies to certain HF components and modules, and the two new agreements announced today further expand the relationship between Broadcom and Apple. Recently, the silicon giant revealed in an SEC filing discovered by the Wall Street Journal that it had signed a new agreement with Apple for “the supply of a number of high-performance wireless components and modules.” The company has already colored a market in 2019 for “RF components and modules” used in iPhones and iPads, which is about $10 from the list of parts according to JP Morgan estimates. The “2020 SOWs” agreements complement existing ones for the supply of high-frequency components and modules to the iPhone manufacturer and could generate broadcom revenue of up to $15 billion. According to a Broadcom 8-K filing, the two 2020 work declarations and a previous 2019 agreement cover Apple products that will be on the market for the three-and-a-half-year period from January 2020, until June or July 2023. Based on Apple`s standard output frequency, this would include the first three generations of 5G iPhones, and everywhere from two to four next generations of iPads. The agreements include all Broadcoms “providing a number of specified high-performance wireless components and modules,” although the various elements are not listed. The new supply contracts with Apple are expected to pay Broadcom $15 billion by 2023, in addition to another contract reached last year. It is important that the contracts give Broadcom a guaranteed place in Apple products for years to come. In addition, this type of agreement makes the potential sale of Broadcom more attractive. Given that the price of Broadcom RF`s entire business is estimated at $10 billion, this contract could easily attach it to a deal that Apple could still conclude. This expanded partnership could be a bridge to an agreement – or maybe just a supplier contract, which is quite possible.
Broadcom Inc. announced new agreements to supply components to Apple Inc. devices, which were released in mid-2023. Some Broadcom Inc. subsidiaries have two separate multi-year employment contracts (the “2020 SOWs”). Both are available for delivery of a number of high-performance wireless components and modules to Apple for use in its products. $15 billion is a lot, but in the world of big technology, big deals are made every day, so that despite some opportunities to read between the lines in this market, as I suggested, it can only be a straight line supplier agreement, apple is watching its imminent demand. Nevertheless, I see a deeper link between Broadcom and Apple, with the obvious possibility for Apple to take over the RF Frontend business in order to fill a big void in its 5G plans. Apple certainly wants to control its 5G destiny, so this step seems obvious, but time will tell if Apple is taking the plunge.
In particular, Broadcom stated that the new agreements “should provide a number of high-performance wireless components and modules to Apple for use in its products.” The previous agreement, reached in June 2019, concerned the supply of specified high-frequency components and modules.