July 6 (Reuters) - Broadcom said on Monday it has agreed to expand its partnership with Apple through 2031 to develop and supply a range of custom chips, sending the shares of the chipmaker up nearly 4% in premarket trading.
Broadcom has been a supplying key components to Apple for a very long time, including custom radio frequency chips used in iPhones, Wi-Fi and Bluetooth connectivity chips and other networking semiconductors.
Apple is one of Broadcom's largest customers. The iPhone maker accounts
for about 20% of its annual revenue, according to analysts, making it a critical contributor to the chipmaker's business.
The extended partnership reinforces Apple's strategy of locking in long-term supply agreements with key chipmakers to bolster the resilience of its supply chain.
In 2023, the companies announced a multibillion-dollar agreement for Broadcom to develop and manufacture 5G radio frequency components.
The boom in inference - the process by which models respond to user queries - has made custom chips crucial, increasing the orders for advanced processors and intensifying competition.
While Apple has increasingly designed its own processors and, more recently, its C1 cellular modem, it continues to rely on Broadcom for key wireless connectivity and radio frequency components.
(Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli and Arun Koyyur)
