Apple Inc. will deliver some of its upcoming AI features this year through data centers equipped with its own internal processors, part of a wide-ranging effort to imbue its devices with AI capabilities. The company is putting high-end chips — similar to those it designed for Macs — into cloud computing servers designed to handle the most advanced AI tasks coming to Apple devices, according to people familiar with the matter. Simpler AI-related functions will be handled directly on the iPhone, iPad and Mac, the people said, speaking on condition of anonymity because the plan is still confidential.

The move is part of Apple’s long-awaited foray into generative artificial intelligence, the technology behind ChatGPT and other popular tools. The company is trying to catch up with its big tech rivals, but is poised to lay out an ambitious AI strategy at its Worldwide Developers Conference on June 10.

Apple’s plan to use its own chips and handle AI tasks in the cloud was hatched about three years ago, but the company accelerated the schedule after AI craze — fueled by OpenAI’s ChatGPT and Google’s Gemini — forced it to move more quickly.

The first AI server chips will be the M2 Ultra, which was released last year as part of the Mac Pro and Mac Studio computers, although the company is already looking at future versions based on the M4 chip.

Apple shares briefly hit a session high of $184.59 in New York trading after Bloomberg reported the details. Shares are down more than 4% for the year. A representative for Cupertino, California-based Apple declined to comment.

Relatively simple AI tasks—like providing users with a summary of their missed iPhone notifications or incoming text messages—can be handled by the chips in Apple’s devices. More complex tasks, such as generating images or summarizing long news articles and creating long responses in emails, will likely require a cloud-based approach — as well as an upgraded version of Apple’s Siri voice assistant.

The move, coming as part of Apple’s fall release of iOS 18, represents a shift for the company. For years, Apple has prioritized device processing, touting it as a better way to ensure security and privacy. But people involved in creating Apple’s server project — codenamed ACDC, or Apple Chips in Data Centers — say components already in its processors can protect users’ privacy. The company uses an approach called Secure Enclave that can isolate data from a security breach.

For now, Apple plans to use its own data centers to manage cloud functions, but eventually it will rely on outside facilities — as it does with iCloud and other services. The Wall Street Journal previously reported on some aspects of the server plan.

Luca Maestri, Apple’s chief financial officer, hinted at the approach during an earnings call last week. “We have our own data center capacity and then use third-party capacity,” he said when asked about the company’s AI infrastructure. “It’s a model that has worked well for us historically, and we plan to continue that way going forward.”

Working with AI features on devices will still be a big part of Apple’s AI strategy. But some of those capabilities will require its latest chips, like the A18 that launched in last year’s iPhone and the M4 chip that debuted in the iPad Pro earlier this week. These processors include significant upgrades to the so-called neural engine, the part of the chip that handles AI tasks.

Apple is rapidly updating its product line with more powerful chips. For the first time, it’s bringing a next-generation processor—the M4—to its entire Mac lineup. The Mac mini, iMac, and MacBook Pro will get the M4 later this year, and the chip will make its way into the MacBook Air, Mac Studio, and Mac Pro next year, Bloomberg News reported in April.

Taken together, the plans lay the groundwork for Apple to weave AI into much of its product line. The company will focus on features that make users’ lives easier as they go about their day — say, by making suggestions and offering a personalized experience. Apple has no plans to launch its own ChatGPT-style service, although there have been discussions about offering this option through a partnership.

Just last week, Apple said that the ability to run AI on its devices would help it stand out from the competition.

“We believe in the transformative power and promise of AI, and believe we have strengths that will set us apart in this new era, including Apple’s unique combination of seamless integration of hardware, software and services,” CEO Tim Cook said during earnings call.

Without going into detail, Cook said Apple’s in-house semiconductors would give it an edge in this still-nascent field. He added that the company’s focus on privacy “is at the heart of everything we create.”

The company has invested hundreds of millions of dollars in the cloud initiative over the past three years, according to the people. But there are still gaps in its offerings. For users who want a chatbot, Apple has held discussions with Google and Alphabet Inc’s OpenAI. for integrating one into the iPhone and iPad.

Talks with OpenAI have recently intensified, suggesting a partnership is likely. Apple may also offer a range of options from outside companies, people familiar with the discussions said.

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