Apple hunts for AI chip acquisitions to cut Nvidia reliance

Apple ↘ 0.80% is actively searching for acquisitions of AI chip companies to strengthen its server capabilities, according to a report published Tuesday by The Information. The move signals an escalation in the iPhone maker's efforts to reduce dependence on Nvidia ↘ 1.47% as it races to build out its artificial intelligence infrastructure.theinformation

Talks With Bankers and Startups

The Information reported that Apple has held discussions with investment bankers and semiconductor startups in recent months as part of its push to develop custom AI server chips. The effort comes under incoming CEO John Ternus, the hardware engineering veteran who is set to take over from Tim Cook on September 1. Ternus's background in chip design and hardware has been seen as a signal that Apple would pursue a more aggressive silicon strategy in the AI era.reuters+4

Apple shares rose following the report, which investors interpreted as evidence that the company is willing to pursue larger deals to close its AI gap with rivals.investing

A Broader Chip Strategy Takes Shape

The acquisition push is the latest in a series of moves Apple has made to build its own AI silicon supply chain. In January, the company acquired Israeli AI startup Q.ai for close to $2 billion. Apple also struck a $30 billion multiyear chip manufacturing deal with Broadcom ↘ 2.62% announced earlier this month, covering more than 15 billion U.S.-made chips. Separately, Apple reached a preliminary chip-making agreement with Intel ↘ 1.02% to produce some of its device chips domestically.macrumors+4

Apple has also been developing its own AI server chip, code-named Baltra, in partnership with Broadcom, which is aimed at reducing reliance on Nvidia's costly processors for cloud AI workloads. Currently, Apple accesses Nvidia hardware through Google Alphabet Inc. ↘ 3.58% Cloud rather than purchasing chips directly.barrons+1

The AI Arms Race Intensifies

The pursuit of chip acquisitions underscores how the competition for AI computing power has extended beyond hyperscalers like Google and Meta ↗ 1.02% into the consumer technology sector. With Nvidia commanding premium pricing for its AI accelerators, major tech companies have increasingly sought alternatives through custom silicon, strategic partnerships, and acquisitions of smaller chip designers.

For Apple, the stakes are particularly high as it attempts to deliver on a revamped AI strategy unveiled at WWDC in June, which included a new Siri powered by on-device and cloud-based models.cnbc+1