Broadcom (AVGO) shares moved lower Tuesday following a report that Apple (AAPL) is planning to dump the chipmaker's products and replace them with in-house designed chips within the next two years.
Bloomberg reported late Monday that Apple, which has been working to reduce its reliance on third-party chipmakers, will replace chips made by Broadcom that are used for Wi-Fi and Bluetooth connections. Apple accounts for around 20% of Broadcom's overall chip sales.
The report added the Apple is also looking to replace Qualcomm's QCOM cellular modem chips with its own in-house design, a move that has been flagged by the San Diego-based tech group for several months.
Apple cut ties with Intel (INTC) in mid-2020 when it revealed plans to move the design of chips for its new line of Mac computers in-house using set architecture from Britain's ARM Holdings. The tech giant will continue to rely on chips manufactured by Taiwan Semiconductor, however, after the group looks to bring its $12 billion facility in Arizona online sometime next year.
TSMC is also expected to begin processing some of Apple’s AAPL new A-series and M-series chips at the new plant, with reports of plans to double overall capacity to around 40,000 wafers per month.
Broadcom shares were marked 2.9% lower in early afternoon trading Tuesday to change hands at $559.53 each. Apple shares, meanwhile, were marked 0.3% lower from last night's close at $129.81 each.
Apple will publish its December quarter earnings on January 26, with early estimates indicating a bottom line of $1.98 per share on revenues of $122.7 billion.
