Apple said to be working on custom AI server chip based on TSMC’s 3nm process

Despite numerous indications of Apple’s focus on AI algorithms running exclusively on local chips, a new rumor suggests a different direction. Apple may also require “AI server” chips, and once again, vertical integration appears to be crucial for the company’s success in the sector.

Apple appears to be developing its own custom AI server processor, aiming to commence mass production by the second half of 2025. The speculation originates from “Phone Chip Expert,” a Weibo user known for accurately predicting Apple’s moves in the mobile industry.

Cupertino’s new AI chip will be fabricated using TSMC’s 3nm process, as per MacRumors. The 3nm technology stands out as one of the most advanced semiconductor manufacturing solutions available, promising notable enhancements in both energy efficiency and performance compared to previous generation nodes like 5nm and 7nm.

While other major tech firms concentrate on delivering server-based AI services to users via the internet, Apple is anticipated to prioritize on-device AI solutions. Future Apple mobile devices could integrate substantial Neural Processing Unit (NPU) components to effectively accelerate machine learning algorithms and large language models. This local approach aligns with Apple’s commitment to prioritize user privacy.

A custom chip dedicated to server-based AI acceleration could prove beneficial for Apple, particularly since certain AI tasks like LLM training may remain impractical for local devices (mobile or PC) for the foreseeable future. Leveraging the alleged new processor could further Apple’s vertical integration strategy, similar to its approach with the Arm-based Apple Silicon chips that power its latest devices.

While Nvidia continues to dominate the market with its AI acceleration GPUs and server processors, many companies are pursuing silicon independence through custom chip designs. Microsoft and AMD appear to be collaborating on a new chip, while Google recently unveiled the Arm-based Axion processor to efficiently handle AI algorithms and tasks in the cloud.

Weibo user Phone Chip Expert isn’t just an ordinary rumor-monger. The unknown user claims to have 25 years of experience in the IC industry, including work on Intel Pentium processors. Previous claims by PCE that proved accurate include predictions of a water-resistant iPhone 7 and the use of older A15 Bionic chips in iPhone 14 models.