This article appeared in Electronic Design and has been published here with permission.
Apple is ramping up its use of U.S.-produced components coming on the heels of a new “multibillion-dollar” deal with Broadcom. Under the pact, Broadcom will develop a range of radio-frequency (RF) chips, including FBAR filters, and other advanced wireless connectivity components and modules with Apple.
Accordingly, the chips will be designed and built in several key U.S. manufacturing and technology facilities, including Fort Collins, Colorado, which is the site of one of Broadcom’s major fabs.
The Santa Clara, California-based vendor supplies many of the most important wireless components used in Apple’s iPhone and other flagship consumer devices, including Wi-Fi and Bluetooth chips.
While Broadcom said the agreement requires it to maintain and allocate “sufficient manufacturing capacity and other resources to make these products,” the companies declined to reveal the terms of the deal. Broadcom previously had a $15 billion agreement to supply wireless components and modules to Apple for about three years, ending at some point in 2023. It’s unclear how long the new deal will last.
For Apple, the new agreement also marks its latest move to specifically buy chips made in the U.S., as the pandemic and geopolitics push it to reshape its sprawling global supply chain.
The latest deal with Broadcom is an extension of Apple’s pledge in 2021 to invest $430 billion in the U.S. economy over half a decade. Apple said it’s on pace to meet its goal through direct spending with American suppliers, along with ongoing investments in its U.S. data centers and other capital expenditures.
“All of Apple’s products now depend on technology engineered and built here in the United States, and we will continue to deepen our investments in the U.S. economy,” said CEO Tim Cook in a statement.
Further to that, Apple indicated it would buy U.S.-made chips from TSMC’s new $40 billion manufacturing site outside of Phoenix, Ariz. TSMC is responsible for building the most advanced chips used by Apple, including the M-series processors in its latest Macs. However, the company is expanding its U.S. presence to appeal to Apple and other American customers as well as ease concerns from U.S. officials about China.
Apple intends to be the largest customer at the fab, which will roll out chips based on the 4-nm node when it enters mass-production in 2024. A second plant under construction at the site will fabricate chips based on the 3-nm process—its most state-of-the-art silicon currently in production—further in the future.
The fabs will likely be partly funded by the U.S. government. Tens of billions of dollars in aid from the CHIPS Act will funnel to companies planning to build chip manufacturing facilities on U.S. soil.
Major U.S. electronics companies are also keen to diversify their component supply chains due to disruptions caused by the pandemic. For its part, Apple is increasingly giving U.S. sites at its third-party suppliers a more important role to play in the company’s operations.
For Broadcom, the supply agreement shores up its relationship with one of the most coveted customers in the semiconductor market, even as Apple aims to reduce its dependence on other third-party suppliers.
For years, Apple has been investing in its in-house semiconductor operations in a bid to differentiate its mobile devices from rivals. In a turn of events, the consumer electronics giant is reportedly trying to create its first cellular modem, recently purchasing Intel’s modem unit to give a boost to the effort.
Under the latest deal, Apple is engaging Broadcom for film bulk acoustic resonator (FBAR) filters, which are placed in front of the cellular modem in smartphones and other devices to help them dial into the crowded mid- and high-band frequencies used by 4G and 5G networks. More than 10,000 combinations of frequency bands are used by 5G, up from 1,000 used by 4G networks.
Broadcom has long been one of the leaders in RF filters, which are plugged into the signal chain between the antennas and the baseband modem to isolate and clarify signals from different frequency bands and block out interference. But it’s facing competition from rivals like Qualcomm, which is taking it on with a new category of RF filter called ultraBAW.
Apple said that the new deal with Broadcom will also allow it to invest in “critical automation projects and upskilling” with engineers and other fab technicians at the Broadcom facility in Colorado. Apple said it already helps support more than 1,100 jobs at the manufacturing facility.