Apple is considering acquiring a chipmaker to bolster its AI server chip capabilities. [Getty Images]
Apple is considering acquiring a chipmaker to bolster its AI server chip capabilities. [Getty Images]

Apple is considering acquiring a chipmaker to strengthen its AI server chip development capabilities, according to people familiar with the matter.

The Information, a US technology news outlet, cited multiple sources in reporting Wednesday that Apple has recently approached some semiconductor startups about a potential sale. The company has also held acquisition-related discussions with investment banks, sources said.

Apple currently powers its internal AI servers with its in-house M2 Ultra chip, though observers say its performance has fallen short of expectations. The company had planned to release a next-generation server chip this year under the codename "Baltra," but the schedule has slipped. With its own chips underperforming, Apple has turned to Nvidia chips via Google Cloud for tasks requiring high computing power.

Apple has long been seen as trailing other major technology companies in AI. To close the gap, the company unveiled a revamped Siri voice assistant integrated with Google's Gemini AI model at last month's annual Worldwide Developers Conference.

Limited partnerships with outside companies such as Google have helped lift performance, but constraints remain. Apple has had to borrow Google Cloud's computing infrastructure because its own AI chips cannot fully run large models like Gemini — underscoring how wide the gap remains.

Apple is now exploring acquisitions as a way to boost its in-house chip performance. The company has historically been cautious about large-scale mergers and acquisitions, but that stance appears to be shifting. Earlier this year, Apple acquired Israeli startup Q.ai for $2 billion. Some analysts also read a signal in Chief Financial Officer Kevan Parekh's recent conference call remarks, in which he said the company would move away from its long-held "net cash neutral" policy of balancing cash holdings against debt — a shift seen as laying the groundwork for M&A activity.

Expectations of a shift in Apple's M&A strategy are also tied to a leadership transition at the top. This fall, CEO Tim Cook is set to step down and hand the reins to his successor, John Ternus. Ternus, a hardware specialist, is widely expected to accelerate Apple's AI push.

Bloomberg earlier reported that Apple overhauled the development roadmap for its in-house M-series chips in response to AI demands. Apple has traditionally released each chip generation — from M1 through M5 — in base, Pro and Max variants. Under the revised plan, however, the M6 will launch only in a base model, skipping the higher-end Pro and Max versions to accelerate the release of subsequent chips. Instead, Apple plans to develop M7 Pro and Max chips optimized for AI computing, along with a higher-performance M7 Ultra.

An AI server chip based on the M7 Ultra is not expected to be ready until 2029. Apple has also extended its partnership with semiconductor design firm Broadcom through 2031.


kate01@heraldcorp.com