Apple hunts AI chip acquisitions as M2 Ultra servers fail to deliver on advanced workloads

Apple is reportedly shopping for AI chip companies - Engadget

Apple's current M2 Ultra-powered servers don't seem to be cutting it. Apple doesn't tend to spend a ton of money on buying companies, but that might change as it looks to shore up its AI processing power. The company is said to have been in talks with semiconductor makers and bankers about possible acquisitions in order to bolster its servers. According to The Information, which first reported the news, Apple has faced performance issues with servers that run on its M2 Ultra chips. Those are used for some AI tasks, though the heavy lifting (such as the Gemini model that's behind Siri AI) is seemingly handled by NVIDIA chips on Google Cloud. Apple is said to have tried using its own servers for that purpose, but its infrastructure is evidently insufficient. Bloomberg reported this week that a server chip based on the M7 Ultra won't be ready until 2029, but noted that Apple will soon upgrade its infrastructure with M5 Ultra chips. Apple reportedly planned to debut a next-gen server chip (codenamed "Baltra") this year, but that timeline appears to have slipped. Last week, Apple struck a deal with Broadcom to buy $30 billion worth of chips that the latter makes in the US. Apple's chip design expertise is primarily in the realm of consumer devices, so it makes sense that the company would look to bring in more support on the server side. It got into making its own chips in the first place after buying PA Semi for $278 million in 2008, but Apple doesn't typically splash much cash on acquisitions. It bought AI startup Q.ai for almost $2 billion this year. That was its second largest acquisition after the $3 billion it paid for Beats over a decade ago. Given the importance of chips to AI companies, Apple might have to pay a premium for any acquisitions in that domain in the near future. It has plenty of flexibility if it decides to go down that route, though. As of the end of March, it had $45.6 billion in cash and cash equivalents.

Apple hunts AI chip acquisitions to fix its servers

Apple is hunting AI chip acquisitions to power its AI servers, a rare move for a company that almost never buys big. Its own M2 Ultra chips could not keep up. Apple built a trillion-dollar business on chips it designs itself. It cannot design the ones its AI needs fast enough, so it is going shopping. The iPhone maker is hunting for AI chip acquisitions, The Information reported. In recent months it has talked to bankers about deals and approached chip startups to ask if they would sell. That is a rare move for a company that almost never buys big. The reason is a problem Apple cannot hide. Its own AI servers, which run on internally designed M2 Ultra chips, are struggling. The heavy lifting behind the new, Gemini-powered Siri runs instead on Nvidia chips inside Google's cloud. Apple tried to use its own machines for the job, and they were not up to it. The chip that slipped Apple has a server chip of its own in the works, codenamed Baltra. It was due this year. It slipped. Bloomberg reports that a chip powerful enough to rival Nvidia may not land until 2029, with an M5 Ultra upgrade filling the gap. Buying its way to the answer would break Apple's habits. Its biggest deal ever was the $3bn Beats purchase in 2014. It built its entire chip empire off a much smaller buy: PA Semi, for $278m in 2008. Even this year's spending looks modest next to its rivals. Apple paid about $2bn for the Israeli AI startup Q.ai, its second-largest deal on record. A more open wallet Two things suggest Apple is ready to spend more. Its finance chief, Kevan Parekh, told analysts the company would drop its long-held goal of holding as much cash as debt. That frees up money, and Apple sat on $45.6bn of it at the end of March. The other is people. Tim Cook hands the chief executive job to hardware boss John Ternus in September, and chip chief Johny Srouji now oversees all of Apple's hardware. Both are engineers, and both may be readier to buy their way out of a bind. Still leaning on others Acquisitions are only one route. Apple is also in talks with PrismML, a startup that shrinks big AI models to run on an iPhone. And it just committed to $30bn of chips from Broadcom, a partnership it extended to 2031. All of it points the same way. Apple wants off Nvidia, and clear of the wider memory and hardware squeeze reshaping the industry. Designing its own silicon is the long game. Buying someone else's might be the shortcut. For a company that guards its independence, needing either is the real story.

Apple seeks AI chip acquisitions to fix server performance woes

Apple is reportedly seeking to acquire AI chip companies to enhance its processing power amid performance issues with its current M2 Ultra-powered servers. The company has engaged in talks with semiconductor manufacturers and bankers regarding potential acquisitions that would improve its server capabilities. According to The Information, Apple has encountered difficulties with servers that use M2 Ultra chips for AI tasks. Heavier workloads, such as those from the Gemini model powering Siri AI, are currently dependent on NVIDIA chips operating on Google Cloud. Apple attempted to utilize its infrastructure for these tasks but found it insufficient. Bloomberg reported that a new server chip based on the M7 Ultra will not be available until 2029. However, Apple plans to enhance its infrastructure soon with M5 Ultra chips. Additionally, a next-generation server chip, codenamed "Baltra," was initially expected to launch this year, but that timeline appears to have been delayed. Last week, Apple finalized a $30 billion deal with Broadcom for chips manufactured in the United States. The company's expertise in chip design has primarily concentrated on consumer devices, prompting the move to seek additional support in the server domain. Apple began developing its own chips after acquiring PA Semi for $278 million in 2008. The company does not typically make large acquisitions but recently spent nearly $2 billion on AI startup Q.ai, marking its second largest acquisition after the $3 billion spent on Beats. Given the high demand for chips in the AI sector, Apple may need to pay a premium for any acquisitions in this area. As of March, the company had $45.6 billion in cash and cash equivalents available, providing significant flexibility for future deals.

Apple Reportedly Eyes Chip Startup Acquisitions

Apple is known for designing custom silicon for its iPhone and Mac models. The Cupertino-based company now seems to be preparing for a broader push to expand its AI processing power by acquiring AI chip companies. Apple is said to have approached investment bankers and several chip makers to assess their interest in a possible acquisition. The iPhone maker, meanwhile, is said to be working on a new next-generation AI server chip. Earlier this year, Apple made a deal with an Israeli AI audio startup. Apple Considers Chip Startup Buyouts The Information, citing unnamed sources, reports that Apple has approached several semiconductor startups to assess their interest in a potential acquisition. The company also reportedly had discussions with investment bankers about possible deals. Apple's interest in acquiring chip startups reportedly comes as it faces challenges with the performance of its in-house AI servers, which currently rely on its custom-designed M2 Ultra chips. The company earlier reportedly planned to launch the next-generation chip codenamed "Baltra" this year, but the project has been reportedly delayed. Currently, more demanding tasks are handled by Gemini-powered Siri, which runs on Google Cloud's Nvidia GPUs. Acquisition of AI chip companies is expected to mark a shift from Apple's previous pattern of buying small startups. Back in 2024, the brand acquired Beats for $3 billion (roughly Rs. 28,944 crores) to acquire Beats in 2014. Apple purchased Intel's smartphone modem division in 2019. In January this year, Apple acquired an Israeli AI startup, Q.ai, for close to $2 billion (roughly Rs. 17,200 crore). Apple is rumoured to be in talks with PrismML. All of this comes as Apple is gearing up for a major leadership transition in the coming months. Senior Vice President of Hardware Engineering John Ternus is set to replace Tim Cook as CEO on September 1. The changes also coincide with Apple's new legal action against OpenAI. Last week, the Cupertino-based company reportedly filed a lawsuit against OpenAI, alleging that it misappropriated Apple's intellectual property.

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

In recent months, Apple has reportedly reached out to startup companies to understand whether they would be interested in selling their businesses. Apple is reportedly planning to buy semiconductor startups as it tries to improve its AI technology and catch up with rivals in the AI race. According to The Information, the company has been speaking with investment bankers and chip startups about possible acquisitions. The report claims that Apple has been exploring potential acquisitions of semiconductor startups to "boost its efforts to build server chips for running AI." In recent months, Apple has reportedly reached out to startup companies to understand whether they would be interested in selling their businesses. The company is said to be considering these deals as it is facing problems with the performance of its current AI servers. Also read: OnePlus may shut down in India as Oppo plans major global restructuring: Report Currently, Apple's AI servers use its in-house M2 Ultra systems. However, these systems are reportedly not powerful enough for more advanced AI workloads. According to the report, Apple has also delayed its next-generation AI server chip, internally known as Baltra. The chip was expected to launch in 2026. While Apple is developing its own AI hardware, it is reportedly relying on other companies for more demanding AI tasks. The report says some of the advanced processing behind the new Siri, which uses a Gemini-based model, runs on Nvidia GPUs through Google Cloud. Also read: OpenAI GPT 5.6 Sol reportedly deletes files without user consent, leaves them angry If Apple goes ahead with a major acquisition, it would be different from its usual approach. The company has traditionally bought smaller startups to add new technology or talent. However, Apple has completed large deals in the past. It bought Beats for $3 billion in 2014 and acquired most of Intel's smartphone modem business for $1 billion in 2019. More recently, Apple reportedly acquired Israeli AI startup Q.ai for nearly $2 billion. Reports also claim that Apple had discussions with PrismML, whose technology can make large AI models small enough to run directly on iPhones. Do note that Apple has not officially announced any acquisition plans.