Apple aims to replace Broadcom and Qualcomm chips

Massive semiconductor market shake-up

Apple is working to replace Broadcom and Qualcomm chips with its own components, giving the firm complete control over the technology used in its mobile devices.

According to Bloomberg, Apple's plan includes replacing the Broadcom chips that provide Wi-Fi and Bluetooth by 2025.

The iPhone maker is also working to replace Qualcomm's cellular modem chips by the end of 2024 or the beginning of 2025.

Apple had originally planned to replace the Qualcomm component as soon as this year, but delays in the development process have extended the deadline.

Apple has been making efforts to reduce its dependence on other chipmakers in recent years.

It already creates its own Arm-based chips, often produced by TSMC in Taiwan. It has also stopped using the majority of Intel chips on its Mac computers, instead choosing for in-house components known as Apple Silicon.

The upcoming move may now affect the largest manufacturers of wireless components and could further upend the semiconductor industry, which earns billions of dollars supplying the world's most profitable company.

Apple is said to be Broadcom's biggest client, contributing over $7 billion (20%) of Broadcom's net sales for the fiscal year 2022.

Broadcom had warned for years that its dependence on Apple would not last for ever. The company continues to supply Apple with other components, such as radio-frequency and wireless charging chips, but the iPhone maker has been working on customising those parts as well.

Last month, Broadcom CEO Hock Tan was optimistic that the company would keep a presence at Apple.

"We believe we have the best technology and delivering value to our customers," he said.

"There's no reason to find something else where you're not the best."

Broadcom stock dropped dramatically after Bloomberg's report.

This is also bad news for Qualcomm, which makes the Snapdragon X65 5G modem in the iPhone 14.

Like Broadcom, Qualcomm is a major Apple supplier. Despite warning for years that its dependence on the Cupertino-based firm would eventually fall, Apple still generated 22% of Qualcomm's annual revenue (more than $10 billion) in 2022.

Bloomberg's report says Apple intends to deploy its own cellular processors in just one new iPhone first, before progressively transitioning away from Qualcomm silicon over a three-year period.

The company is also said to be working on a future chip that would consolidate all wireless functionalities, including cellular modems, Wi-Fi and Bluetooth, into a single component.