Broadcom is about to lose a big order? Apple is reportedly switching to self-developed Wi-Fi chips for iPhone and home products starting next year

Apple's chip development has made new progress, and we may see iPhones supported by Apple's self-developed Wi-Fi chips as early as next year.

On December 12th, Thursday, Eastern Time, Bloomberg reported that Apple is close to replacing Broadcom's products with its self-developed chips in iPhones and its home products, as insiders revealed that Apple has spent several years developing a self-developed chip codenamed Proxima, with ambitious plans to use this chip in new products starting next year, replacing the current Wi-Fi/Bluetooth chips supplied by Broadcom.

The report stated that Apple will launch the aforementioned self-developed chip combining Wi-Fi and Bluetooth next year for newly released home devices, including the new version of the Apple TV set-top box and the HomePod mini smart speaker. Apple also plans to use this chip in the next generation of iPhones later next year and in iPads and Macs in 2026.

Insiders said that the use of the Proxima chip marks a significant breakthrough for Apple's hardware technology department led by Senior Vice President Johny Srouji. Like other self-developed chips from Apple, this chip is also produced by TSMC, but the technical specifications of the chip have not been disclosed. Insiders also mentioned that Apple's goal is to develop an end-to-end wireless solution that allows this wireless component to be tightly integrated with other components and to be more energy-efficient.

A representative from Apple declined to comment on the report. If the news is true, it means that Apple will control the way hardware devices connect to cellular networks and Wi-Fi hubs, entering a field that has long been dominated by chip manufacturers. This should allow Apple to better control the user experience and pave the way for new device formats such as thinner iPhones and wearable technology.

This is undoubtedly bad news for Broadcom. Apple is Broadcom's largest customer, contributing 20% of Broadcom's revenue in the fiscal years 2022 and 2023. Broadcom is the largest supplier of Wi-Fi/Bluetooth chips for Apple. Apple's self-developed chip replacement means losing a major client like Apple for Broadcom.

After the news broke, on Thursday during midday trading, Apple's stock price rose, reaching a daily high with an intraday increase of 0.9%. Broadcom's decline quickly widened, hitting a daily low with an intraday drop of over 3.9%, later narrowing to within 2%, ultimately closing down about 1.4%, falling from the closing high created by a more than 6% rebound on Wednesday. After hours, Broadcom announced that its fourth-quarter EPS earnings exceeded expectations, with full-year AI revenue growing 220% to $12.2 billion, reflecting strong demand for AI processors and network components, causing Broadcom's stock price to jump, rising nearly 5% at one point.

In fact, news of Apple's plan to replace Broadcom chips surfaced as early as the beginning of last year. At that time, Wallstreetcn mentioned that the media reported that Apple hoped to stop using Broadcom chip components by 2025 and switch to self-developed Wi-Fi/Bluetooth chips, also mentioning that Apple is working to integrate modems and Wi-Fi chipsAnd components such as Bluetooth, hoping to replace Qualcomm's modem chips as early as the end of 2024 to early 2025.

At the end of October this year, Apple's "prophet," Ming-Chi Kuo, an analyst at Tianfeng International Securities, revealed on social media X that Broadcom currently supplies Apple with 300 million Wi-Fi chips annually, and Apple may reduce its reliance on Broadcom chips next year by launching self-developed chips. The new products, including the iPhone 17, which will be released in the second half of next year, will use Apple's self-developed chips, manufactured using TSMC's 7-nanometer process, supporting the latest Wi-Fi 7 specifications.

Last week, media reports indicated that Apple will release a self-developed modem system that has been in development for over five years in the spring of next year, which will first be used in the new generation entry-level smartphone iPhone SE, marking Apple's first update since 2022, replacing the cellular modem chips from long-time partner Qualcomm. A Bloomberg report on Thursday mentioned that Apple's transition to its own cellular modem chips is unrelated to the replacement of Broadcom's Wi-Fi/Bluetooth chips; however, the two components will ultimately work together