Apple is exploring the acquisition of chip startups to strengthen its own AI server processors. The iPhone maker is struggling with underwhelming performance from its in-house AI servers, which currently run on M2 Ultra chips.
That’s according to sources cited by The Information. According to insiders, Apple has approached several chip startups to gauge their interest in a takeover. The company is also said to have spoken with bankers about potential deals.
This interest comes at a time when Apple is struggling with the performance of its in-house AI servers. These currently run on in-house designed M2 Ultra chips, essentially Mac silicon repurposed for data centers. This has proven insufficient for the server workloads Apple has in mind.
Baltra is facing delays
At the heart of the problem is a chip known internally as “Baltra.” Apple had planned to release a future version of this AI server chip this year, but that project has been delayed, according to sources speaking to The Information. Baltra is being developed in collaboration with Broadcom as a custom server processor for AI functions in the cloud. The chip is intended for AI inference and was to be built on TSMC’s 3nm process.
Just last week, Apple announced it would purchase more than $30 billion worth of chips from Broadcom as part of a multi-year supply deal. This collaboration builds on earlier plans, including Project ACDC, in which Apple is working with TSMC on its own data center chip.
Earlier this year, Apple attempted to run Google’s Gemini models on its internal servers as part of a revamped Siri. However, the Mac-based chips could not handle the large model. As a result, Apple had to run parts of the revamped assistant on Nvidia chips in Google Cloud.
Major acquisitions are rare for Apple. The last deal dates back to January, when the company acquired the Israeli firm Q.ai, which develops AI technology for audio. As of the end of March, Apple had $45.57 billion in cash and cash equivalents on its balance sheet.