Apple Supplier Broadcom Reportedly Phasing Out Wi-Fi Chip Business

[MacRumors]

Communications chip maker and Apple supplier Broadcom is planning to phase out its Wi-Fi chip business in order to streamline its workforce and product line, according to industry sources in Taiwan (via DigiTimes).

The move follows the company's recent acquisition by Avago Technologies and forms part of a larger strategy to allocate more resources for research and development in the fiber-optic and server sectors, according to the report.

The Wi-Fi chip business is said to yield relatively low gross margins for Broadcom compared to other product lines. Sources cited fierce price wars for mass-market applications such as notebooks, tablets, TVs and smartphones as the reason behind the decision to phase out the company's involvement in the sector.

Broadcom has reportedly almost halved the workforce stationed at its plant in Taipei, while companies such as MediaTek, Realtek Semiconductor and RDA Microelectronics have already received a pull-in of short lead-time orders from Broadcom's customers in the Wi-Fi chip sector.

It's unclear whether the phase out, if confirmed, is a disruption for Apple as it gears up for annual product refreshes across its desktop and mobile devices. Apple currently uses Broadcom chips in its Apple Watch, iPhones and iPads, as well as its line of Macs that support 802.11ac, including the MacBook Air, Retina MacBook Pro, and iMac.

Two years ago, Apple hired two high-level baseband hardware engineers who left their longtime positions at Broadcom to join an engineering team at Cupertino. In 2013, Apple acquired low-power wireless chip provider Passif Semiconductor. The acquisitions were seen as part of a larger strategy by the company to better control the development and production of its core technologies.

Article Link: Apple Supplier Broadcom Reportedly Phasing Out Wi-Fi Chip Business

 

[Sirious]

So Apple will now do away with WiFi chips in its products?

 

[Max(IT)]

Apple will easily find someone else

 

[KPOM]

Perhaps Broadcom is phasing out this division because Apple is moving to a new supplier.

 

[MentalFloss]

Apple will easily find someone else

True. There are enough chinese no-name companies willing to be the lowest bidder for whatever chips are needed for the iPhone 7S.

 

[Farmerp2005]

Wonder what will happen to Airport products. Maybe an uprated Time capsule is also on the cards.

 

[DCIFRTHS]

True. There are enough chinese no-name companies willing to be the lowest bidder for whatever chips are needed for the iPhone 7S.

I hope it's not a no-name company, and whoever they source form is able to supply all of Apple's needs - including all of the computers and tablets they still manufacture...

 

[gsmornot]

I replaced my cable modem recently. One of the reasons for my selection was its Broadcom chipset. The story says phase out so I assume it will take a while. Apple has wanted to design and produce more of the internal hardware, maybe they will take over the production of this part themselves. Heck, they could buy the hardware used in production maybe.

 

[Chupa Chupa]

Perhaps Broadcom is phasing out this division because Apple is moving to a new supplier.

Actually the other way around. Broadcom wants to lower its exposure to Apple, especially in areas where the downside is greater than the upside, something that became fairly heavy pre-merger. The increased diversification the merger brought + shedding low profit businesses will make company earnings less dependent on sales to one company. At one point 25% of Broadcom's earnings were based on Apple sales.

 

[Porco]

So Broadcom are becoming Narrowcom?

 

[garylapointe]

The Wi-Fi chip business is said to yield relatively low gross margins for Broadcom compared to other product lines. Sources cited fierce price wars for mass-market applications such as notebooks, tablets, TVs and smartphones as the reason behind the decision to phase out the company's involvement in the sector.

But you'd think in the quantities that Apple would order (of the same item) it would be worth it even if it was small (no marketing necessary if Apple says "we'd like 200 million of those").

Who does think it's worth it to make them for those products?

Gary

 

[newdeal]

Apple already has trouble with wi-fi on its devices maybe this will force them to rewrite all the kexts to fix them

 

[Baerok]

No Wi-Fi chip in iPhone 7 . Apple will step back into the 1990s.

 

[Robert.Walter]

I hope it's not a no-name company, and whoever they source form is able to supply all of Apple's needs - including all of the computers and tablets they still manufacture...

Apple tries not to use a single supplier strategy.

 

[Serban]

we already heard that apple will use the Intel chips

 

[GLS]

Consider the source. It's Digitimes.

It's possible Broadcom is quitting the business. But given Digitimes track record, who really knows.

 

[Fender2112]

But you'd think in the quantities that Apple would order (of the same item) it would be worth it even if it was small (no marketing necessary if Apple says "we'd like 200 million of those").

Who does think it's worth it to make them for those products?

Gary

Let's assume you have 1000 resources to use and split them between product A and product B. Product A yields 3% profit while product B yields 10%. Which product do allocate the resources to?

That's how it works. You invest your resources where they are the most profitable.

 

[MentalFloss]

I hope it's not a no-name company, and whoever they source form is able to supply all of Apple's needs - including all of the computers and tablets they still manufacture...

Well, I would also hope that it's not a no-name company, but the PC manufacturers and Apple have helped create a market situation where It is near-impossible to make money with a Wifi chip, so in the end, only no-name manufacturers producing with the lowest possible cost will be able to supply them.

 

[thewitt]

Apple, indeed all cellphone suppliers, will have no problem sourcing highly reliable wifi chip sets.

 

[Max(IT)]

True. There are enough chinese no-name companies willing to be the lowest bidder for whatever chips are needed for the iPhone 7S.

IIRC Intel was interested in the business... Not exactly a Chinese no name company...

 

[maflynn]

Interesting, I didn't know the wifi chips were low margin products. I only heard of broadcom because of their networking chips. i wonder what else they make that they'd be focusing on.

 

[thatanonymoususer]

Considering that it also impacts Bluetooth devices like the Magic Trackpad and Magic Mouse, they will have to do some product refreshes, but there would have to be a grace period where Apple buys as many of the chips as they can.

There are plenty of Wi-Fi chip manufacturers including Intel. It is surprising to see Broadcom leave, but I guess that's what happens when you can buy an assembled version of their product (ready to put in a laptop's expansion slot) for ~$6 on Amazon.

In other news, Qualcomm just announced a new line of high speed wifi chips.

 

[StevieD100]

and in other news, an unnamed wireless device manufacturer is preparing to sue Apple for breaching a number of patents related to WiFi technology.

Well, that's what will happen unless Apple get the patents that Broadcom hold properly licensed before they release a product using alternative devices. (IMHO)

 

[pat500000]

So Apple will now do away with WiFi chips in its products?

No, Apple is going for Ethernet route lol

 

[DevNull0]

So Broadcom are becoming Narrowcom?

The opposite of broad in this context is base.