Apple has announced a $30 billion investment to purchase microchips produced in the United States by Broadcom, an American company specializing in semiconductor design but also active in the manufacturing phase: it owns, for example, a factory in Fort Collins, Colorado, which will receive an upgrade through a $1.5 billion expenditure, supported by Apple.
A LASTING RELATIONSHIP?
The two companies, however, have already been collaborating for some time: Broadcom is a long-standing supplier of microchips and components for radio frequency connectivity, Bluetooth, and Wi-Fi that allow iPhones, iPads, and MacBooks to connect to the Internet and mobile networks. It has also announced that it has extended its supply contract with Apple until 2031 and that it will develop custom microchips that will be present in the company’s future devices.
It is not certain, however, that Broadcom will remain a crucial player in Apple’s supply chain for long. In recent years, the company has internalized several steps: for example, it has replaced Qualcomm’s modem chips with its own and has replaced Intel’s computer processors in favor of in-house designed systems-on-a-chip.
Last month, however, Apple struck an agreement with Intel on the design and production of microchips in the United States.
APPLE NEEDS TO CATER TO TRUMP
Apple’s agreements with Intel and, subsequently, with Broadcom are part of a broader plan by the company to reorganize its supply chain and to cater to the administration of Donald Trump, which insists heavily – and also in aggressive ways – on restoring American manufacturing capacity. Referring to the deal with Broadcom, Apple CEO Tim Cook said he is “grateful to the president and his administration for supporting important projects like this.”
Last year Trump threatened to impose 25 percent tariffs on iPhones if Apple did not move its manufacturing supply chain from Asia to America; thus, the company announced a $600 billion spending plan in the United States over four years. Rather than restructuring its entire supply chain, which is composed of many Asian suppliers – India, for example, is becoming the new manufacturing base for iPhones – Apple has focused on semiconductors, the highest value component: in addition to commitments with Intel and Broadcom, it has announced purchases from TSMC in Arizona, Texas Instruments in Texas, and GlobalFoundries in New York.
