Apple announced on Tuesday a multiyear contract with Broadcom that is valued at more than $30 billion and is focused on designing and manufacturing custom silicon components and wireless connectivity technologies for Apple devices. The companies said the work will result in the production of in excess of 15 billion chips assembled in the United States and will support hundreds of American jobs.
The agreement represents Apple's largest single commitment under its American Manufacturing Program, launched last year to accelerate manufacturing within the United States. As part of the deal, Broadcom will carry out a $1.5 billion capital expenditure program to expand and modernize its Fort Collins, Colorado manufacturing operations.
Broadcom's Fort Collins plant will be tasked with producing advanced radio frequency components, including FBAR filters, along with other wireless connectivity technologies that the companies identified as integral to future Apple products.
Apple's CEO Tim Cook commented on the pact: "Apple and Broadcom have a long history together, and this new phase of our partnership further accelerates our commitment to American manufacturing and innovation. The cutting-edge components built in Fort Collins are essential to delivering the incredible performance and connectivity our customers expect, and we're proud to deepen our investments in U.S.-based suppliers that share our commitment to excellence and innovation."
Broadcom's president and CEO Hock Tan said the company was pleased to expand its Fort Collins manufacturing footprint after decades of working with Apple.
The investment is part of a broader Apple pledge to invest $600 billion in the U.S. economy over four years, with stated goals that include supporting manufacturing, creating jobs, and advancing technology development.
Market reaction immediately following the announcement showed Broadcom shares trading 0.7% lower in pre-market trading on Wednesday, while Apple shares were down 0.6% in the same session.
Context and implications
- The agreement channels a substantial portion of Apple's American Manufacturing Program commitments into U.S.-based semiconductor production and related manufacturing activity.
- Broadcom's planned $1.5 billion capital expenditure at Fort Collins is intended to modernize capacity for RF components such as FBAR filters and other wireless connectivity parts.
- Immediate market moves in both companies' shares were modestly negative in pre-market trading following the announcement.
Notable limitations in the disclosure
- The companies described employment support as "hundreds" of jobs but did not supply a precise headcount or a timeline for hiring.
- The announcement does not provide a production timetable for the more than 15 billion U.S.-made chips.
- Details on how the capital expenditure will be phased or the expected ramp schedule for the Fort Collins facility were not provided.