Apple Inc (NASDAQ:AAPL) has inked a multibillion-dollar deal with Broadcom to develop 5G radio frequency components in the US, the company announced Tuesday.
Broadcom, a technology and advanced manufacturing company, will develop FBAR filters (a type of radio frequency filter used in cell phones), along with other wireless connectivity components, according to a statement.
The FBAR filters will be designed and built at several US sites, including Fort Collins, Colorado, where Broadcom has a major facility. Apple already supports more than 1,100 jobs at the Fort Collins FBAR filter manufacturing facility, according to the statement.
The deal is part of Apple’s 2021 pledge to invest $430 billion in the US economy, the company said. It also isn’t the first time Apple and Broadcom have partnered up, as Broadcom announced it would sell $15 billion of wireless components to Apple in 2020.
Apple shares were down 0.7% to $172.99 Tuesday morning, while Broadcom shares added 2% to $692.10.
Analyst downgrade
On Monday, Loop Capital downgraded Apple to Hold from Buy but maintained its price target of $180.
Analysts cited concerns over Apple’s builds and shipment forecasts.
"We've now seen Apple reduce its builds (and we believe shipment forecasts) for essentially the second time in the last 4 weeks," analysts wrote in a note to clients.
Specifically, the firm believes Apple reduced its June-quarter iPhone builds and shipments by about 10% in the last six weeks to 34.2 million units. Apple's iPhone 15 production plans now call for 87 million units in 2023, down from 98 million initially.
That adds downside risk to Apple's guidance and Wall Street estimates for the June quarter, the analysts noted.
On the bright side, Apple seems to have increased its iPhone production for the September quarter ahead of the iPhone 15 launch. Loop Capital estimates that Apple plans to build 55 million iPhones next quarter.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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