Apple’s Exodus From Outsourcing Continues With Plans to Drop Broadcom Chips
New reports indicate that Apple will be developing its own Wi-Fi and Bluetooth chips.
Over the past few years, Apple has continually made headlines for reducing its reliance on outsourced components. Apple has invested significant money and effort into developing its own chips, ranging in function from application processors to cellular modems.
Now, Apple is continuing this push with reports that it is developing its own Wi-Fi and Bluetooth chips to replace the Broadcom and Skyworks components currently used in iPhones. In this article, we’ll take a look at some of Apple’s recent moves to in-house silicon, the company's motivations for this switch, and Apple’s plan to replace its reliance on Broadcom, Qualcomm, and other major chipmakers.
The First Step: Apple's Big Divorce From Intel
In 2020, Apple began to wean off Intel-based processors when it released its first-ever in-house processor for MacBooks. The first release in this line of processors was the Apple M1, which integrated a CPU, GPU, and Apple’s neural engine on one piece of silicon. Building off this success, Apple followed with the M1 Pro, the M1 Max, and the M1 Ultra.
Apple’s line of Mac silicon. Image used courtesy of Apple
Beyond processors, Apple has been eyeing the opportunity to produce wireless chips in-house as well. Apple purchased the majority of Intel’s smartphone modem business back in 2019. With this purchase, the company acquired the talent, patents, and technical know-how necessary to develop a competitive product in the wireless space.
Apple's Gradual Departure From Outsourcing
Why is Apple so focused on bringing silicon in-house?
For one, Apple could be looking to gain more control over the semiconductor supply chain. Instead of relying on the availability of components from a number of disparate manufacturers, Apple can be in complete control of its own supply chain by designing components in-house. Even two years after COVID-19-related supply chain issues began, Apple CEO Tim Cook asserted that the Cupertino-based company was “not immune” to such procurement challenges, claiming that the iPad business had “very significant supply constraints” during the first quarter of 2022.
Apple can also create a greater sense of design cohesion by developing its own silicon. When Apple purchased processors from Intel, for example, the company lacked the ability to seamlessly unify computing architecture and the software that ran on it. With an in-house processor, Apple fully controls the entire computing suite, improving the performance and cohesion among devices. The move to in-house also fortifies Apple’s historical approach of creating a closed ecosystem (i.e., hardware and software) for its products.
Apple has long sought to provide a closed ecosystem. Image courtesy of Business Research Methodology
On the wireless side, the impetus for bespoke hardware was spurred for a number of reasons. In recent years, Apple and Qualcomm have been involved in lawsuits regarding Apple’s disapproval of Qualcomm’s licensing structure. Specifically, Apple uses Qualcomm's cellular modems for 4G and 5G phones but was unhappy paying a licensing fee based on the value of their product instead of paying only the cost of the modem itself. By working to bring wireless chips in-house, Apple is reducing its dependency on external companies, meaning it can increase profitability by avoiding licensing fees.
The Move Toward Wireless Independence
Now, to continue its push toward manufacturing self-reliance, Apple is reportedly establishing a new office to develop its own Wi-Fi and Bluetooth chips.
Some technologists speculate that Apple’s intention is to remove its dependence on Broadcom, which currently supplies Apple with its Wi-Fi and Bluetooth chips for iPhones. An iFixit teardown of the iPhone 13 Pro revealed that Broadcom and Skyworks supply a significant amount of the iPhone’s third-party circuitry. Apple is one of Broadcom's largest customers, accounting for 20% of the company’s yearly revenue.
Teardown of an iPhone 13 Pro. Image courtesy of iFixit
Reports indicate that Apple may develop a single chip that integrates Wi-Fi, Bluetooth, and cellular connectivity. This is a tall pursuit, especially for a company with no proven history of developing wireless solutions. However, if successful, Apple will remove its reliance on Broadcom, Qualcomm, and Skyworks, leading to greater profitability and device control.