Apple seeks AI chip acquisitions to escape Nvidia
Apple is approaching AI chip startups for potential acquisitions, a rare move driven by the failure of its own servers to handle the heavy computing demands of modern artificial intelligence.
Apple is actively seeking to acquire AI chip companies, approaching startups and consulting bankers about potential deals. The move marks a sharp shift for a company that historically avoids large acquisitions, with its biggest ever being the $3 billion purchase of Beats in 2014.
The urgency stems from a glaring hardware bottleneck. Apple’s own M2 Ultra chips have proven inadequate for running heavy AI server workloads, forcing the company to rely on Nvidia chips housed in Google’s cloud to power its new Gemini-enabled Siri. For investors, this reliance on a direct rival’s ecosystem represents a significant vulnerability in Apple’s vertically integrated model.
Apple is developing a dedicated server chip, codenamed Baltra, but it has already slipped from its original schedule this year. The gap will reportedly be filled by an M5 Ultra upgrade, while a chip truly capable of rivaling Nvidia may not arrive until 2029. This timeline leaves Apple exposed to the broader memory and hardware supply squeezes reshaping the global semiconductor industry.
To accelerate its timeline, Apple appears willing to open its wallet. Chief financial officer Kevan Parekh recently announced the company would abandon its long-standing goal of matching its debt with cash holdings. With $45.6 billion in cash reserves reported at the end of March, Apple has the firepower to pursue deals well beyond its recent $2 billion acquisition of the Israeli AI startup Q.ai.
A changing of the guard may also drive a more aggressive acquisition strategy. In September, Tim Cook will hand the chief executive role to hardware boss John Ternus. Concurrently, chip chief Johny Srouji has expanded his remit to oversee all of Apple’s hardware. As engineers, both leaders may be more inclined to buy their way out of a technical bind rather than wait for internal development.
Acquisitions are not the only lever Apple is pulling. The company is in talks with PrismML, a startup focused on compressing large AI models to run locally on iPhones, and recently committed to buying $30 billion worth of chips from Broadcom through 2031. Ultimately, designing its own silicon remains Apple's long-term objective, but the immediate need to escape Nvidia's grip is forcing a pragmatic, uncharacteristically deal-hungry approach.
