Apple's AI Plan Takes Shape. It's Joining the Chip Race.

$Apple(AAPL)$   seems late to the artificial-intelligence party and investors are getting restless. But maybe the tech giant has everything under control.

Apple has been developing its own AI chips for data center servers, The Wall Street Journal reported late Monday. Project ACDC, which has been running for several years, builds on Apple's role as a leading player designing chips for iPhones, iPads and other products, the report added.

Apple has been working with $Taiwan Semiconductor Manufacturing(TSM)$   to develop the AI chips, though it's not yet clear whether they've made a breakthrough, according to people familiar with the matter. The server chip would focus on running AI models, known as inference, rather than training them, an area it's leaving $NVIDIA Corp(NVDA)$   to dominate.

The shares have fallen 5.6% so far in 2024 through Monday's close but are 7% up over the past month. Apple did not immediately respond to a request for comment early Tuesday.

The project could potentially give Apple a leg up in the fast-paced global AI race. The company is holding a "special event" Tuesday morning but it's expected to unveil new iPads rather than any big AI news.

All eyes will be on the company's Worldwide Developers Conference next month, when Apple is expected to officially roll out its AI strategy.

The bulk of Apple's AI features are expected to be contained in iPhones or the Apple Watch but having its own AI server chip will give the company more control over its offering.

CEO Tim Cook has been dropping hints recently ahead of the hotly-anticipated event. "We believe in the transformative power and promise of AI and we believe we have advantages that will differentiate us in this new era," he said on Apple's earnings call last week.

Groundbreaking $Apple(AAPL)$   silicon chips was one of those advantages he then listed, along with the company's hardware, software and services integration.

The company has the infrastructure, brand strength, expertise and customer base to make a success out of AI but the pressure is on for Apple to deliver.

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