Apple and Broadcom Forge a Decade-Long Silicon Fortress

Apple and Broadcom have locked in a 10-year silicon supply agreement running through 2031, covering custom AI server chips—codenamed Baltra—and connectivity components for Apple's ecosystem. The deal secures approximately 20% of Broadcom's annual revenue, providing the chipmaker with predictable cash flow while Apple insulates its hardware margins from semiconductor supply volatility.

Broadcom currently trades at $371 with a forward P/E of 35.5x and projected earnings growth of 72%, reflecting investor confidence in the stability this partnership delivers. Both companies are simultaneously executing share buyback programs, signaling management's view that current valuations present opportunity even as they commit capital to long-term operational priorities.

The agreement addresses Apple's push into proprietary silicon for its AI infrastructure, reducing reliance on third-party chip architectures. For Broadcom, locking in two decades of Apple revenue (the partnership dates back to prior agreements) transforms what could be cyclical semiconductor exposure into a quasi-annuity stream, supporting the premium multiple.