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.
