Apple eyes chip startup buys for AI server push

Apple is reportedly weighing acquisitions of semiconductor startups as it tries to improve the hardware behind its AI servers. According to The Information, the company has recently spoken with bankers about possible deals and also contacted chip startups to gauge whether they would be open to a sale.

The reported talks come as Apple struggles with the performance of its current in-house AI server systems, which use M2 Ultra chips. The Information also says Apple’s next server chip, code-named Baltra, has slipped beyond its planned 2026 debut.

For now, Apple is using M2 Ultra-based systems for some internal AI workloads. More demanding tasks are being handled by the Gemini-based model behind the new Siri, which runs on Nvidia GPUs in Google Cloud, according to the report.

A larger chip deal would mark a shift from Apple’s typical acquisition pattern, which has usually focused on smaller companies. Still, it would not be without precedent. Apple spent $3 billion on Beats in 2014 and $1 billion for most of Intel’s smartphone modem business in 2019. More recently, it acquired Israeli AI startup Q.ai for a reported nearly $2 billion.

The Information previously reported that Apple had also held talks with PrismML, whose technology can shrink large AI models so they can run directly on iPhones, though no deal or valuation was reported.

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The discussions come amid a broader shift inside Apple. Its CFO, Kevan Parekh, recently said the company would no longer treat reaching a net cash-neutral position as a formal goal, a change that many interpreted as giving Apple more room for larger acquisitions.