Apple Building Local Semiconductor Development Unit in Irvine

Monday, January 03, 2022

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(Orange County Business Journal)

Apple Inc. is in the early stages of setting up a wireless chip development team in Irvine, adding a notable new addition to Orange County’s semiconductor sector, one of the area’s core tech industries.

The goal of the program, and whether it may pose a challenge to Irvine semiconductor maker Skyworks Solutions Inc. (Nasdaq: SWKS) and the local operations of Broadcom Inc. (Nasdaq: AVGO) remain open questions.

The semiconductor supply for Cupertino-based Apple (Nasdaq: AAPL) has long been a subject of speculation, including the possibility of bringing some production in-house for the nearly $3 trillion-valued behemoth.

For Skyworks, it is particularly important because the local company says that Apple has accounted for more than 50% of its sales for the past three fiscal years.

Broadcom reported that nearly 20% of its fiscal 2021 sales were to Apple.

Hiring Push

Apple has posted about 10 local jobs related to the project as of Dec. 23 on LinkedIn, with another eight that may be connected, according to Business Journal research.

The positions include analog/mixed-signal design engineer and wireless design verification engineer.

“Come join Apple’s growing wireless silicon development team,” according to one of the postings.

Wireless chip uses include cellphones, iPads and watches.

“As an AMS (analog/mixed signal) design engineer, you will be at the center of a wireless SoC design group with a critical impact on getting Apple’s state-of-the-art wireless connectivity solutions into hundreds of millions of products,” another Apple job posting said.

A specific location for the local base of operations hasn’t been disclosed. Landlord Irvine Co. has reportedly signed several mid-sized office leases of late at its UCI Research Park campus that holds the headquarters of Skyworks, as well as larger deals in the Spectrum area of the city, according to brokerage data. Specific tenants for those deals haven’t been disclosed yet.

Bloomberg News, which first reported on the new Apple unit, said on Dec. 16 that the team’s products could eventually replace components supplied by Broadcom, which started in Irvine and is now based in San Jose, as well as Skyworks.

Skyworks is OC’s fourth-largest publicly listed company, weighing in with a nearly $26 billion market cap as of Dec. 29. It employs about 500 people in Irvine. Broadcom is valued around $275 billion and counts an estimated 1,300 people at its sprawling Five Point Gateway campus.

Apple currently doesn’t have sizeable office operations in OC, but is a large tenant for Irvine Co. in Silicon Valley.

The Bloomberg report stated that “a few dozen” engineering positions were expected to be filled locally by Apple.

“Engineers will work on wireless radios, radio-frequency integrated circuits and a wireless system-on-a-chip, or SoC. They’ll also develop semiconductors for connecting to Bluetooth and Wi-Fi,” the report stated.

Seeking further information from the players involved, the Business Journal reached out to Apple three times by email for comment, but received no response.

A Skyworks spokesperson said Dec. 22 the company “is in a quiet period and we are unable to comment regarding the plans of other companies.” The company is expected to release its next earnings statement toward the end of January.

Skyworks has said previously it is seeking to diversify its revenues and is emphasizing its role in the rollout of 5G, the fifth-generation broadband cellular network.

Two queries to Broadcom produced no reply.

Satellite Office Approach

While the mid-December Bloomberg report raised quite a few eyebrows—and sent chipmaker shares down—at least one analyst remained cautious about the extent and intent of Apple’s program (see story, page 9).

“The insinuation was that Apple would bring this in house and that would effectively put these guys a little bit on the roadside if you will,” Piper Sandler Semiconductor Senior Research Analyst Harsh Kumar told the Business Journal on Dec. 20. “We disagree with that statement completely.”

Bloomberg said that Apple is poised to attract employees from Broadcom and Skyworks, in a manner similar to what it did in San Diego when it opened an office there about three years ago and attracted workers from that city’s most valuable public company, chipmaker Qualcomm Inc. (Nasdaq: QCOM).

The news agency added: “It’s part of a broader strategy of expanding satellite offices, letting the tech giant target engineering hotbeds and attract employees who might not want to work at its home base in Silicon Valley. The approach also has helped Apple further its goal of making more of its own components.” 

Apple Inc.’s decision to set up a wireless chip development center in Irvine sent jitters through the Cupertino giant’s semiconductor suppliers in mid-December.

But Piper Sandler Semiconductor Senior Research Analyst Harsh Kumar told the Business Journal on Dec. 20 that he sees a fairly limited program behind Apple’s efforts.

Here are excerpts from his comments:

• “We do not believe that Apple will set up a production facility. We thought certainly that Apple might hire a few engineers, and that’s certainly within the realm of possibility.”

• “The Bloomberg story, to be clear, insinuated that Apple might be getting ready to get into the business of making RF pieces, something that currently Broadcom and Skyworks do for Apple.”

RF—or radio frequency—is sometimes used synonymously for wireless communication.

“The insinuation was that Apple would bring this in house and that would effectively put these guys a little bit on the roadside if you will. We disagree with that statement completely.”

• “Skyworks probably has somewhere in the neighborhood of excess of 3,000 engineers that have been doing this for over 15 years, trying to come up with these RF chips. They are super complicated.”

“For Apple to think about doing this right now, in the middle of the biggest chip supply issue, seems kind of counter-intuitive to me. So, I stand on sense that Apple is probably trying to prepare itself to inspect and determine what they are buying from its suppliers. And that’s where we stand.”

Many companies have been feeling the effects of a worldwide chip shortage recently.

• Kumar, who is also a Pipe Sandler managing director, said Apple may be setting up the facility so that it has “somebody on Apple’s side to talk to these companies that are supplying the parts.”

“In no way do I see this as a threat to Skyworks or Broadcom.”

• “The number of engineers that they are hiring does not allow them to get into the business of making these chips or designing them.”

Kumar told clients in a note earlier that dealing with complex RF technologies would require a “great level of understanding and many more job functions than currently posted.”
 

Category: Economic Development, Technology, Irvine