Tech Beetle briefing IN AI

Apple plans to buy chip startups to catch up in the AI race: Report

Essential brief

Apple is reportedly exploring acquisitions of semiconductor startups to improve its AI technology and address performance challenges with its current AI servers. The company has engaged with invest

Key topics

apple plans chip startups catch Apple AI According Information M2 Ultra

Key facts

Apple is exploring acquisitions of semiconductor startups to improve AI server performance.

Current AI servers using M2 Ultra chips are insufficient for advanced AI workloads.

Apple has delayed its next-generation AI server chip, Baltra, originally planned for 2026.

Some AI processing for Siri currently relies on Nvidia GPUs via Google Cloud.

Highlights

Apple is in talks with investment bankers and chip startups about potential acquisitions.

The company aims to build more powerful server chips for AI applications.

Apple's M2 Ultra-based AI servers face performance limitations for advanced tasks.

The Baltra AI server chip launch has been delayed beyond 2026.

Apple has previously made large acquisitions, including Beats and Intel's modem business.

Why it matters

Apple's potential acquisitions of semiconductor startups highlight the company's strategic efforts to enhance its AI hardware capabilities amid increasing competition in the AI industry. Strengthening its AI infrastructure could enable Apple to deliver more advanced AI features and reduce reliance on external providers, impacting the broader AI hardware market.

Apple is reportedly planning to acquire semiconductor startups to strengthen its artificial intelligence technology and catch up with competitors in the AI sector. According to a report by The Information, Apple has been in discussions with investment bankers and chip startups about possible acquisitions to enhance its AI hardware capabilities. The company is exploring these options to boost its efforts in building server chips optimized for AI workloads.

In recent months, Apple has reached out to various startup companies to gauge their interest in potential sales. This initiative comes as Apple faces challenges with the performance of its current AI servers, which rely on the in-house M2 Ultra systems. These systems are reportedly insufficient for handling more advanced AI tasks, prompting the company to seek new solutions.

Apple has also delayed the launch of its next-generation AI server chip, internally known as Baltra, which was initially expected to debut in 2026. While Apple continues to develop its own AI hardware, it currently depends on external providers for more demanding AI processing. For example, some advanced processing for the new Siri, which uses a Gemini-based model, runs on Nvidia GPUs via Google Cloud.

If Apple proceeds with a significant acquisition, it would mark a departure from its typical strategy of acquiring smaller startups primarily for technology or talent. However, Apple has completed large acquisitions in the past, including the $3 billion purchase of Beats in 2014 and the $1 billion acquisition of most of Intel's smartphone modem business in 2019. More recently, Apple reportedly acquired Israeli AI startup Q.ai for nearly $2 billion.

There are also reports that Apple has engaged in discussions with PrismML, a company specializing in technology that enables large AI models to run directly on iPhones by reducing their size. As of now, Apple has not officially announced any acquisition plans related to these reports.

Key topics in this update include apple plans, chip startups, and catch.