Broadcom Lands Deals to Place Components in Apple Smartphones
January 23 2020 - 6:55PM
Dow Jones News
By Tripp Mickle and Kimberly Chin
Broadcom Inc. said it reached multiyear supply agreements with
Apple Inc. to provide wireless components for Apple products into
2023, deals that could generate billions of dollars worth of
business.
The three-and-a-half-year agreements, in addition to an
agreement last year to supply Apple with radio-frequency units,
will deliver $15 billion in revenue to Broadcom, the
California-based chip maker said Thursday.
The supply agreements give Broadcom -- which sells Bluetooth, RF
and Wi-Fi components for mobile handsets among other products --
contractual guarantees from Apple and will remain a customer in the
years ahead. It is an important assurance at a time when Apple is
increasingly opting to design chips it once purchased from
suppliers.
Apple accounted for roughly 20% of Broadcom's net revenue in the
year ended Nov. 3, and about 25% of revenue in fiscal 2018.
Shares in Broadcom rose 3.1% to $329.34 in after-hours trading
Thursday. The stock closed up 2.2% in the regular session.
Broadcom is working with Credit Suisse Group AG to find a buyer
for its radio-frequency business, The Wall Street Journal reported
in December, citing people familiar with the matter. The business,
which generated $2.2 billion in revenue in fiscal 2019, is expected
to fetch as much as $10 billion.
Broadcom's RF unit is a market leader in so-called FBARs -- film
bulk acoustic resonators -- that are used in cellphones and base
stations to filter out unwanted radio transmissions.
New radio-frequency chips are considered crucial to getting the
best possible performance out of the latest phones for the 5G
wireless technology communications standard. Qorvo Inc. and other
companies such as Qualcomm Inc. and Skyworks Solutions Inc. have
won spots in new 5G phones from Samsung Electronics Co., Huawei
Technologies Co. and LG Electronics Inc. Apple is expected to
launch its first 5G smartphones later this year.
Broadcom, historically known for semiconductors that go into
cellphones and networking equipment, has increasingly pushed into
software through acquisitions of CA Technologies Inc. in 2018 and a
deal with Symantec Corp.'s corporate-focused security business last
year.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Kimberly Chin
at kimberly.chin@wsj.com
(END) Dow Jones Newswires
January 23, 2020 18:40 ET (23:40 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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