Apple is reportedly in discussions to acquire AI chip companies to enhance its AI processing capabilities amid performance issues with its M2 Ultra-powered servers. The company typically hesitates to spend heavily on acquisitions but may change its approach to address current needs.
According to The Information, Apple has faced difficulties with servers using its M2 Ultra chips for AI tasks. Heavy processing, including the Gemini model behind Siri AI, currently relies on NVIDIA chips from Google Cloud, as Apple’s own servers are inadequate for these tasks.
Bloomberg reported that a new server chip based on the M7 Ultra will not be available until 2029. However, Apple plans to upgrade its infrastructure with M5 Ultra chips shortly. The company also intended to introduce a next-generation server chip, codenamed “Baltra,” this year, but that timeline has been delayed.
Last week, Apple signed a $30 billion deal with Broadcom for chips manufactured in the United States. Apple’s chip design expertise is largely focused on consumer devices, making server-side support crucial as it considers these acquisitions. The company began designing its own chips after acquiring PA Semi for $278 million in 2008.
Earlier this year, Apple acquired AI startup Q.ai for nearly $2 billion, its second-largest acquisition following the $3 billion spent on Beats over ten years ago. The critical role of chips in the AI sector may lead Apple to pay a premium for future acquisitions in this field.
As of March’s end, Apple held $45.6 billion in cash and cash equivalents, providing significant financial flexibility for any potential acquisitions.
