Tech

Broadcom strikes $15 billion deal with Apple to sell it iPhone parts

Key Points
  • Broadcom will sell $15 billion of wireless components to Apple, it announced in an SEC filing on Thursday.
  • Broadcom said in a December filing that Apple's business comprised 20% of Broadcom's net revenue in 2019 and 25% in 2018.
  • The announcement did not specify which components Broadcom would provide to the iPhone maker.
Hock Tan, CEO of Broadcom
Lucas Jackson | Reuters

Broadcom will sell $15 billion of wireless components to Apple, it announced in a SEC filing on Thursday.

The parts will be used in forthcoming Apple products launching in the next three and a half years, according to the filing, which said that Broadcom and Apple had entered into two separate agreements.

The announcement did not specify which components Broadcom would provide to the iPhone maker. According to a teardown analysis of the iPhone 11, Broadcom supplied several chips used in the iPhone, including chips for Wi-Fi and Bluetooth, and an Avago-branded RF front-end chip that helps the phone connect to wireless networks.

Analysts expect Apple to launch 5G-compatible iPhones over the next few years, which gives companies who make wireless components an opportunity to gain new business and sell parts that are compatible with 5G technology.

However, it's possible that the agreement only impacts 4G parts, Moor Insights analyst Patrick Moorhead said.

VIDEO2:2602:26
Stick with semiconductors, says Oppenheimer's Ari Wald

Broadcom is currently looking to sell a wireless chip division focusing on "radio-frequency" chips that supplies Apple, the Wall Street Journal reported in December.

Broadcom said in a December filing that Apple's business comprised 20% of Broadcom's net revenue in 2019 and 25% in 2018. Broadcom is one of Apple's key American component suppliers, according to Apple. In 2018, JP Morgan analysts estimated that each iPhone contained $10 worth of Broadcom parts.

Broadcom was up over 3% in extended trading.

Follow @CNBCtech on Twitter for the latest tech industry news.