The agreement, announced by Broadcom on Monday, covers the development and supply of custom chips and is expected to provide greater certainty for both companies while easing concerns over Apple's continued reliance on the U.S.-based chipmaker.
Investors welcomed the announcement, sending Broadcom's shares up more than five per cent following news of the extended deal.
Broadcom has been a key supplier to Apple for years, providing essential components used across the iPhone ecosystem. These include radio frequency chips that enable cellular connectivity, as well as semiconductors supporting Wi-Fi, Bluetooth and other wireless networking functions.
Although Apple has steadily expanded its in-house chip development—most recently with its C1 modem—it still depends heavily on Broadcom for several critical wireless and radio-frequency technologies that power its devices.
According to analysts, Apple contributes roughly 20 per cent of Broadcom's annual revenue, making the iPhone maker one of the semiconductor company's largest and most strategically important customers.
The renewed agreement also aligns with Apple's broader strategy of securing long-term commitments with key suppliers to strengthen its supply chain amid rising geopolitical tensions, production constraints and surging demand for advanced chips.
Commenting on the significance of the deal, Chief Executive Officer of Futurum Group, Daniel Newman, said the partnership offers Broadcom long-term revenue stability.
"For Broadcom, it's a five-year annuity from the world's most demanding customer, stacked on top of the hyperscaler XPU ramp. Broadcom wins either way the AI cycle breaks," Newman said.
The latest extension builds on a multibillion-dollar agreement announced by the two companies in 2023 under which Broadcom agreed to develop and manufacture 5G radio frequency components for Apple.
The partnership comes at a time when demand for custom-designed chips is accelerating, driven largely by the rapid expansion of artificial intelligence. As AI applications increasingly rely on inference—the process through which AI models generate responses to user requests—technology companies are placing larger orders for specialised processors, intensifying competition across the semiconductor industry.
While Apple designs many of its own processors, including the M-series chips used in Mac computers and the A-series chips that power iPhones, manufacturing remains largely dependent on Taiwan Semiconductor Manufacturing Company (TSMC), the world's biggest contract chipmaker.
However, TSMC has faced mounting production pressure as demand from AI leaders such as Nvidia continues to soar. Apple Chief Executive Officer, Tim Cook, said in April that supply constraints at TSMC had affected iPhone sales.
Apple is also exploring ways to diversify its manufacturing footprint. The company is reportedly in discussions with Intel over producing some chips in the United States, although analysts believe commercial-scale production is unlikely before late 2027.
The company has also faced rising component costs. In June, Apple increased prices for selected MacBook and iPad models after memory chip prices surged by as much as 98 per cent during the first half of 2026, driven by strong demand from AI data centres.
The renewed Broadcom partnership is expected to help Apple maintain greater stability in one of the most critical parts of its global supply chain while positioning both companies to benefit from the continued expansion of AI-driven computing.