Apple’s current M2 Ultra servers don’t seem to be up to the task.
Apple doesn’t tend to spend big money buying companies, but that could change as it looks to bolster its AI processing power. The company has reportedly been in talks with semiconductor makers and bankers about possible acquisitions to bolster its servers.
According to The informationwhich was the first to announce the news, Apple has been facing performance issues with servers running on its M2 Ultra chips. These are used for some AI tasks, although the heavy lifting (like the Gemini model behind Siri AI) is apparently handled by NVIDIA chips on Google Cloud. Apple reportedly tried to use its own servers for this purpose, but its infrastructure is clearly insufficient.
Bloomberg reported this week that a server chip based on the M7 Ultra wouldn’t be ready until 2029, but noted that Apple would soon upgrade its infrastructure with M5 Ultra chips. Apple reportedly planned to release a next-generation server chip (codenamed “Baltra”) this year, but that timeline appears to have slipped. Last week, Apple reached a deal with Broadcom to buy $30 billion worth of chips made by the latter in the United States.
Apple’s chip design expertise is primarily in the area of consumer devices. So it makes sense that the company would look to provide more server-side support. The company moved into making its own chips after buying PA Semi for $278 million in 2008, but Apple doesn’t typically spend a lot of money on acquisitions. It bought AI startup Q.ai for nearly $2 billion this year. This is its second largest acquisition after the $3 billion paid for Beats more than a decade ago.
Given the importance of chips to AI companies, Apple may have to pay a premium for any acquisitions in this area in the near future. However, he has great flexibility if he decides to follow this path. At the end of March, it had $45.6 billion in cash and cash equivalents.
