Apple's Transition to In-House Bluetooth and Wi-Fi Chips

Apple (NASDAQ: AAPL) is preparing to transition to an in-house chip for Bluetooth and Wi-Fi connections, with plans to begin implementation next year. This initiative aims to phase out various components that are currently sourced from Broadcom (NASDAQ: AVGO), according to a report from Bloomberg News.

The new chip, identified by the code name Proxima, has been in development for several years. It is expected to debut in the first iPhones and smart home devices manufactured in 2025, as per sources familiar with the situation.

To produce these new proprietary chips, Apple will partner with Taiwan Semiconductor Manufacturing Co. This development aligns with Apple's broader strategy to enhance its control over key technologies and reduce reliance on external suppliers.

During its annual developer conference in June, Apple shared its commitment to utilizing its own server chips to enhance the artificial intelligence (AI) capabilities across its devices. This transition to in-house components is significant as it demonstrates Apple's ongoing shift towards self-sufficiency in critical hardware technology.

Moreover, this new initiative is distinct from Apple's plans to launch a long-anticipated series of cellular modem chips next year. These modems are expected to replace components previously supplied by Qualcomm (NASDAQ: QCOM). However, future collaboration between the Bluetooth/Wi-Fi chips and the modem technology is anticipated, which suggests a more integrated approach to Apple's device communications.

As of now, Apple has not responded to requests for comments regarding this strategic shift. In another vein, Apple is reportedly collaborating with Broadcom to develop a new AI-specific server chip, internally referred to as Baltra. This chip is specifically designed to tackle the demands of AI processing, indicating Apple's heightened focus in this area.

Despite these advancements, Apple and other tech giants continue to face challenges in reducing their dependency on Nvidia (NASDAQ: NVDA)’s expensive and often constrained supply of processors, particularly for compute-intensive AI services. Interestingly, Broadcom has previously entered into a multi-billion-dollar agreement with Apple to produce 5G radio frequency components, underlining the intricate relationship between both companies.

Apple, Bluetooth, Technology