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Jan 23, 2020

Apple, Broadcom strike US$15B worth of chip-supply deals

An attendee holds an Apple Inc. iPhone 11 smartphone at an Apple store during a product launch event in Sydney, Australia, on Friday, Sept. 20, 2019. Apple's new iPhones with camera enhancements and improved battery life go on sale today. Photographer: Brendon Thorne/Bloomberg

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Broadcom Inc. disclosed new agreements to provide components for Apple Inc. devices released through the middle of 2023.

The San Jose, California-based chipmaker said it entered into two multiyear pacts “for the supply of a range of specified high-performance wireless components and modules to Apple for use in its products.” That’s in addition to another similar agreement that Broadcom reached with Apple in 2019. The three deals could generate about $15 billion in future revenue, Broadcom added.

Broadcom shares rose more than 2 per cent in late trading, while rival Skyworks Solutions Inc. dropped as much as 7.7 per cent.

Broadcom is a major Apple supplier, providing radio-frequency chips that let iPhones, iPads and Apple Watches connect to cellular data networks. Broadcom has also supplied other components to Apple, including chips for connecting devices to Wi-Fi networks.

Broadcom put its radio frequency chip unit up for sale last year. Thursday’s disclosure lets potential acquirers know that they’re buying into a substantial business relationship with Cupertino, California-based Apple.

Apple typically reaches long-term deals with major suppliers, but the company is also developing its own components.