Apple is reportedly planning to phase out Broadcom and Qualcomm chips
Beginning in 2025, Apple plans to replace the Broadcom chips inside its devices with in-house-made chips, according to Bloomberg News. Apple anticipates manufacturing chips to replace the Broadcom components that provide Wi-Fi and Bluetooth connectivity to Apple devices.
Apple's homemade chips would also eventually replace Qualcomm chips, which power the iPhone's cellular connectivity capabilities. Late last year, Apple analyst Ming-Chi Kuo noted that Apple had been attempting to make a 5G chip for years, but recent efforts were futile.
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As a result, Apple was forced to continue to rely on Qualcomm's 5G chips for this year's iPhone releases, according to Kuo. Bloomberg News reported that Apple's chips experienced problems with overheating, battery life, and component validation.
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In its fourth quarter earnings conference call, Qualcomm said, "for Apple product revenue, we now expect to have the vast majority of share of 5G modems for the 2023 iPhone launch, up from our previous 20% assumption. Beyond this, there are no changes to our planning assumption, and we are assuming minimal contribution from Apple product revenues in fiscal '25."
It is no surprise that Apple is planning to create 5G chips to power its flagship product, the iPhone, as the iPhone accounts for over 50% of Apple's revenue.
According to Bloomberg News, Apple is working on technology to create hardware to replace components of Broadcom's and Qualcomm's chips. But Apple is also working on a singular chip that will combine the technology from all chips.
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Creating this chip would be a feat, but Apple has created wireless chips used in AirPods and Apple Watches.
Bloomberg News reports that in 2020, Apple spent $15 billion purchasing Broadcom chips, making Apple Broadcom's top customer, accounting for 22% of its annual revenue.
Qualcomm, Broadcom, and Apple did not immediately respond to comment.