Apple Plans to Manufacture Its Own Chips, Modems for iPhones

Apple Inc. (NASDAQ: AAPL) is planning to replace some components inside its devices with its own come 2025, which means cutting out major pieces manufactured by some of its biggest suppliers.

According to sources familiar with the situation cited by Bloomberg, Apple is in the midst of creating its own chip to power wifi and bluetooth functions on its devices, ultimately replacing the one it currently uses from Broadcom. Apple is hoping to begin installing the in-house-made chip sometime in 2025. The move is likely going to create a major blow to Broadcom, as the US-based tech giant is the chipmaker’s largest customer, accounting for approximately 20% of its revenue in fiscal 2022.

Apple is also expecting to manufacture its first cellular modem chip sometime before the end of 2024 or early 2025, eventually swapping the internal components from Qualcomm Inc, another one of Apple’s key chip suppliers. The iPhone maker initially expected to swap out the Qualcomm modem chip as early as 2023, but ran into developmental impediments. About 22% of Qualcomm’s annual sales came from Apple, amounting to almost $10 billion; the company did warn, however, that the sales to Apple would eventually subside.

If Apple’s plans for manufacturing its own chips comes to fruition, it would mark yet another milestone for the company’s lineup of custom chips, including the A-series-on-a-chip lineup. But, when it comes to the cellular modem, the part could be more tedious to produce. A cellular modem is the most critical part of the device as it allows iPhones to handle phone calls and connect to the internet while away from Wi-Fi. If Apple’s offering is inferior to Qualcomm’s component, it could put the company’s flagship product at a significant disadvantage. The company will still need to rely on Qualcomm for several years as it replaces the component in various devices.

Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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