Apple's M2 Ultra chips couldn't handle the load. When the company tried running Google's Gemini models on its own servers to power a smarter Siri, its in-house processors buckled. Apple had to outsource the work to Nvidia GPUs inside Google Cloud.
Now the iPhone maker is shopping for a fix. The Information reports that Apple has held active talks with investment bankers and semiconductor startups over the past few months to gauge potential buyouts. The goal is to acquire the server chip expertise its internal team has struggled to develop.
Apple's custom Baltra AI server chip was set to debut this year but has reportedly been delayed. Some analysts suggest a true successor might not arrive until 2029, leaving Apple dependent on stopgap hardware and Nvidia-powered cloud rentals for years.
The company's server problems run deeper than a single delayed chip. Apple built its silicon empire designing power-efficient processors for phones and laptops. Making chips for data centers is a different discipline entirely, and the company's current knowledge base is lacking in that area, according to The Information.
New CEO John Ternus, a hardware veteran who took over earlier this year, appears ready to change Apple's acquisition playbook. The company has historically favored small deals in the hundreds of millions, but Ternus may be more willing to spend billions to fix the AI gap.
Apple has already signaled this shift with money. In January, it paid nearly $2 billion for Q.ai, an Israeli startup that interprets speech through facial micro-movements. That deal became Apple's second-largest acquisition ever, trailing only the $3 billion purchase of Beats in 2014.
CFO Kevan Parekh warned during the second-quarter earnings call that Apple was moving away from its net cash neutral policy, freeing up more of its cash reserves for deals. The company has also locked in a multi-year supply deal with Broadcom worth roughly $30 billion for custom chip production, a partnership that runs through 2031. But buying a semiconductor startup outright could give Apple the specialized server talent it needs to eventually cut ties with Nvidia entirely.
Apple's most successful chip acquisition remains the $278 million purchase of PA Semi in 2008, which laid the foundation for the A-series processors and the entire Apple Silicon transition. Nearly two decades later. The company is looking to repeat that playbook at a much higher price point, with its AI ambitions hanging in the balance.
