Apple has spent years pulling more of its hardware stack in-house, but its AI ambitions still appear to need outside help.
Reuters reported that the tech giant has extended its custom chip partnership with Broadcom through 2031, giving one of Apple’s longtime suppliers a continued role as demand for AI hardware reshapes the component market. The expanded agreement includes custom ASIC chips, which can accelerate AI workloads and support more specialized computing needs.
Broadcom has been the component supplier for most of Apple’s connectivity, including cellular, WiFi, and Bluetooth, for years. That relationship has been strained by Apple’s efforts to bring more connectivity in-house through a combined chipset that features all three wireless standards, which is available in the most recent iPhones, iPads, and Macs.
For Apple, the deal comes at a pivotal moment. The company is reportedly developing advanced AI server hardware for Siri and other AI features, while suppliers across the industry face rising demand, higher prices, and more pressure to lock in long-term contracts.
Lack of expertise makes Broadcom essential
It looks like Apple does not yet have the expertise to build its own ASIC chips, which has prolonged its partnership with Broadcom. The iPhone maker is reportedly looking to build advanced AI servers to train AI models and run inference for Siri by early 2027, according to Bloomberg.
The AI server chip, codenamed Baltra, is a supersized version of the M5 Ultra chip. Apple is pushing to have this chip in the next version of the Mac Studio, set to arrive sometime in 2027. This boost in capabilities and reliability could be useful for AI developers building applications on the Mac Studio, as well as for other intensive tasks.
It is unclear whether Apple will add the chipset to any other devices. It could potentially be an upgrade for the MacBook Pro and other high-end products, but it is very unlikely Baltra will come to iPads or iPhones, as they rarely need that much power to run AI apps.
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Partnerships becoming more valuable as demand surges
While Broadcom was one of the original darlings of the AI boom, it has fallen off a bit compared with graphics processing and memory manufacturers, such as Nvidia, Samsung, and SK Hynix.
The deal with Apple may indicate that it remains a key supplier, especially for AI workflows. It has also recently announced a custom chip designed with OpenAI, which will feature as a major part of the AI developer’s Stargate data center buildout.
Solidifying partnerships with component manufacturers may be a key step to keeping costs grounded, as most leading-edge suppliers are seeing huge demand from AI companies. Apple has already had to raise prices on most of its device portfolio this year, with only the iPhone and a few other items spared.
Several memory manufacturers have shifted to locked-in, multi-year supply contracts in order to avoid the boom-and-bust cycle that could follow any contraction in AI infrastructure buildout. Some consumer electronics manufacturers have said these component makers are taking a harder line than in previous generations, forcing them to accept a single price per unit rather than cutting deals for large orders.
This is already affecting the entire industry, with prices for top-end components increasing by over 100 percent in many cases over the past 12 months. For businesses, this could lead to holding onto servers, devices, and components for longer, in an attempt to wait out the cycle and return to normality. But that does not look like it will happen quickly.
Related reading: For a closer look at the devices Apple is reportedly preparing next, read our guide to the company’s rumored 2026 product roadmap, featuring new iPhones, Macs, iPads, and smart home products.