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Apple AAPL -0.91%decrease; red down pointing triangle has been working on its own chip designed to run artificial intelligence software in data center servers, a move that has the potential to give the company an advantage in the AI arms race.
Over the past decade, Apple has emerged as a leading player designing chips for iPhones, iPads, Apple Watch and Mac computers. The server project, which is internally code-named Project ACDC—for Apple Chips in Data Center—will bring this talent to bear for the company’s servers, according to people familiar with the matter.
Project ACDC has been in the works for several years and it is uncertain when the new chip will be unveiled, if ever. Apple has promised many new AI products and announcements at its Worldwide Developer Conference in June.
An Apple spokesman declined to comment.
Apple has been closely working with its chip-making partner Taiwan Semiconductor Manufacturing Co. 2330 1.78%increase; green up pointing triangle to design and initiate production of such chips, yet it remains uncertain whether they have yielded a definitive result, some of the people said.
For Apple’s server chip, the component will likely be focused on running AI models—what’s known as inference—rather than on training AI models, where chip maker Nvidia will likely continue to dominate, according to some of the people.
An Apple server chip could come at an opportune time as rivals such as Microsoft and Meta have spent billions and moved quickly to reorient their businesses around so-called generative AI after the explosive emergence of OpenAI’s ChatGPT service.
Apple investors have grown impatient over the company’s perceived lack of progress in AI. Tech rivals have seen their share prices jump with splashy AI announcements. Microsoft has enjoyed the biggest bump thanks to the company’s close and early partnership with OpenAI. Earlier this year, Microsoft overtook Apple as the world’s most valuable company, and its lead has only grown.
Apple Chief Executive Tim Cook has sought to assure investors that it is investing in the technology and that it will have major AI announcements soon.
“We believe in the transformative power and promise of AI, and we believe we have advantages that will differentiate us in this new era, including Apple’s unique combination of seamless hardware, software and services integration,” Cook said on a conference call for the company’s recent quarterly earnings.
Generative AI systems, such as large language models that power ChatGPT, often crunch immense amounts of data using computer servers hosted in data centers. For that computing power, most large tech companies rely heavily on servers full of chips from Nvidia, which has found itself in the middle of an AI gold rush.
Most of the largest tech companies have developed their own AI server chips or are exploring the possibility, to untether themselves from Nvidia, which has a market share estimated at over 80% in such chips. Google has perhaps the most mature internal AI server chip product, with its tensor processing units, having started on the project in 2013. OpenAI is also in discussions to fund an ambitious internal chip project, The Wall Street Journal previously reported.
Apple’s existing chip prowess might be one avenue where the company can find a critical advantage over other tech giants in AI. Among its rivals, Apple has had the longest history and most success in designing custom silicon. The company first began incorporating its own processing chips into iPhones and iPads in 2010.
In 2017, Apple began incorporating AI-focused processors into its mobile chips. In 2020, it started replacing Intel chips in its Macs with its own custom silicon. These chip efforts have helped differentiate Apple’s products from its rivals’. It is possible that advanced versions of Apple’s M-series chips, which are currently planned for its consumer products, could be capable of performing certain AI functions, such as inference in servers, one source said.
On Tuesday, Apple is expected to unveil a new iPad with potentially a new M-Series processor.
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While Apple has succeeded in developing processing chips for its devices and is now seeking to do so with servers, the company has been struggling to develop a cellular wireless chip to replace mobile chip leader Qualcomm. The launch of an internal Apple cellular modem continues to miss deadlines and get pushed out, the Journal reported last year.
Apple prefers that most uses of AI happen on an iPhone or Apple Watch, but it still needs to run some processes on remote servers accessed over the internet, which is when the Apple server chip would take over. By handling more of those tasks itself, even with the chips in the data center, Apple can have more control of its AI destiny.
Asa Fitch contributed to this article.
Write to Aaron Tilley at aaron.tilley@wsj.com and Yang Jie at jie.yang@wsj.com
The Global AI Race
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Appeared in the May 7, 2024, print edition as 'Apple Pursues Own AI Chip Design'.
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