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Apple's ACDC AI Chip May Challenge Intel, Boost Shares 1.2%

Apple develops in-house AI chip for data centers, signaling a major shift in its AI strategy and competitive positioning.

By Alex P. Chase

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5/7, 01:03 EDT
Apple Inc.
Amazon.com, Inc.
Alphabet Inc.
Intel Corporation
Meta Platforms, Inc.
Microsoft Corporation
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Key Takeaway

  • Apple Inc. is developing an AI chip, code-named ACDC, for data centers, potentially altering its AI tech position and boosting shares by 1.2%.
  • The company plans to unveil a new AI strategy at the Worldwide Developers Conference, including partnerships with Google and OpenAI.
  • Joining tech giants like Amazon and Google with in-house semiconductors could challenge Intel's market dominance.

Apple's AI Chip Development

Apple Inc. is reportedly developing a homegrown chip designed to run artificial intelligence (AI) tools in data centers, a move that could significantly impact its position in the AI technology race. This development, code-named ACDC, represents an extension of Apple's ongoing efforts to create in-house chips, which are already used in its iPhones, Macs, and other devices. The Wall Street Journal, citing unidentified sources familiar with the matter, first reported this initiative. Despite the uncertainty surrounding the deployment of this semiconductor, Apple's shares saw a rise of up to 1.2% in late trading on Monday.

AI Strategy and Partnerships

Apple's venture into AI chip development comes at a time when the company is preparing to unveil a new strategy for artificial intelligence at its Worldwide Developers Conference next month. Expected to focus on proactive features to assist users in daily activities, this strategy highlights Apple's commitment to advancing in the generative AI space. Furthermore, Apple has engaged in discussions with potential partners, including Alphabet Inc.’s Google and OpenAI, to supply generative AI services, indicating a collaborative approach to enhancing its AI capabilities.

Competitive Landscape

By developing its own server processor, Apple would join the ranks of tech giants like Amazon.com Inc.’s AWS, Google, Microsoft Corp., and Meta Platforms Inc., all of which utilize in-house designed semiconductors in their data centers to some extent. This move could challenge the traditional dominance of Intel Corp.’s components in the market. Analyst Jeff Pu of Haitong International Securities mentioned that Apple is using both M2 Ultra and M4 chips to power servers for new AI-based features in iOS 18, underscoring the company's investment in AI technology.

AI Features and External Collaborations

Apple is expected to introduce numerous features based on generative AI with iOS 18 and other software updates announced at WWDC 2024. The company has been developing its own language models capable of running offline, although these models have functional limitations compared to online alternatives. Reports have also surfaced about Apple's discussions with OpenAI and Google to utilize their AI technologies in iOS 18, raising questions about whether Apple will continue these collaborations or rely solely on its own servers and services.