Source: Content compiled from Bloomberg

Apple Inc.'s ambitious plan to make in-house components for its devices includes a switch to its own Bluetooth and Wi-Fi connectivity chips starting next year, a move that will replace some parts currently supplied by Broadcom Inc.

The chip, code-named Proxima, has been in development for several years and is now scheduled to go into the first products in 2025, according to people familiar with the matter. Like Apple's other in-house chips, Proxima will be made by partner Taiwan Semiconductor Manufacturing Co.

The transition is separate from Apple's much-anticipated shift to Qualcomm Inc.'s cellular modems — details of which were reported last week by Bloomberg News - but the two parts will eventually work together.

Apple's goal is to develop an end-to-end wireless approach that is tightly integrated with other components and more power efficient, the people said, speaking on condition of anonymity because the plan hasn't been made public. Representatives for Cupertino, California-based Apple and Palo Alto, California-based Broadcom declined to comment.

Broadcom shares fell as much as 3.9% to $175.99 after Bloomberg News reported the shift. Apple shares rose less than 1% to $248.53 as of 1:23 p.m. in New York.

Apple is one of Broadcom's largest customers, accounting for about 20% of its revenue. Broadcom is scheduled to report its latest quarterly results after the market closes Thursday.

The two new components mark a major breakthrough for Apple's hardware technologies division. The team, led by senior vice president Johny Srouji, previously developed the main processors for iPhones, iPads and Mac computers.

Now, Apple will be in control of how devices connect to cellular networks and Wi-Fi hubs - a position other chipmakers have long held. This should give it more control over the user experience and pave the way for new device formats, such as thinner iPhones and wearable technology.

Apple will begin shipping the combined Wi-Fi and Bluetooth chip as part of new home devices slated for launch next year, including updated versions of its TV set-top box and HomePod mini smart speaker. It also plans to bring the component to iPhones late next year and to iPads and Macs by 2026. Bloomberg News first reported plans for the new chip in January 2023.

Although the move will replace Broadcom's combined Wi-Fi and Bluetooth components in Apple devices, the supplier will still provide a part called a modem RF filter, Bloomberg reported. Apple is also working with Broadcom on next-generation cloud server chips, The Information reported this week.

The Proxima chip isn't Apple's first foray into wireless. The company has long designed custom wireless components for AirPods and Apple Watch. But taking such a critical component in-house for its most important products - the iPhone, iPad and Mac - is risky for Apple.

Wi-Fi and Bluetooth chips ensure Apple devices can surf the Internet over wireless networks and pair with peripherals like headphones and speakers. These are key parts of the Apple experience, and if there's a problem, customers are likely to notice.

Broadcom is a leader in the market for wireless components, and Apple may not be able to match the company's capabilities with its first-generation Wi-Fi chip. However, people familiar with the matter said the component will support the latest Wi-Fi 6E standard, which offers better bandwidth and higher speeds.

With Apple's own wireless chips in its smart home devices, the products will work more closely together and potentially sync data faster. The company plans a big push into the smart home next year: It aims to launch an artificial intelligence-powered home hub that sits on a table or mounts on a wall.

The company has also been developing its own standalone security camera that can pair with other home devices.

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