Apple may have turbo-charged the AI arms race this week after it was reported the tech giant had begun work on a proprietary chip which could give it an advantage over sector rivals. Codenamed Project ACDC, the new chips would run AI software in data centre servers. 

It comes after CEO Tim Cook told investors in February the firm was making significant investments in the field, in which Apple is said to be lagging by observers. From a standing start, Apple could now be poised to mount a serious challenge to kingpin Nvidia.  

What is Project ACDC? 

Standing for Apple Chips in Data Centre, the ACDC chip would focus on running AI models, as per the Wall Street Journal, an area in which Nvidia currently dominates. AI models work to identify particular patterns which emerge from data sets and can then make conclusions based on that input. The tech is credited with the ability to enable ‘groundbreaking’ advances in productivity. 

The project is understood to have been in the works for several years with Apple yet to announce a competition date. However the spectre of Apple’s foray into the sector has analysts speculating the move could give it an edge over its rivals, who are investing billions in generative AI. 

Will ACDC leave investors Thunderstruck? 

An official announcement by Apple on Project ACDC is expected in June when the firm will likely hope the announcement will reverse recent disappointing earnings reports. Michael Lebowitz of RIA said the scheme could boost Apple’s annualised growth. Writing for the outlet he said:

“Apple’s earnings release last week marked another disappointing earnings report. While the share price surged by nearly 7 per cent, the results continue to indicate that Apple is a company with little growth…

“Project ACDC offers the company a new source of growth. Investors should pay close attention. ACDC could help Apple emerge from its growth doldrum.”

CNBC’s Morgan Chittum agreed – saying the move

“Should advance the company’s position in the heated arms race among its Big Tech peers and improve its financial performance.”

Jim Cramer predicted Apple investors would be rewarded for their patience when the firm fully unveils its AI strategy, after months of disappointing returns.  

Could Apple catch up to Nvidia? 

The AI chip market is dominated by Nvidia, which controlled more than 83 per cent of the market in 2023. Chief rivals AMD, Intel and Google, among others, were left fighting for the remainder. But Nvidia’s hold might not be insurmountable, as serious competition is now being mounted on all fronts, with Apple throwing a gauntlet Nvidia’s way in the form of ACDC. 

But ACDC isn’t Apple’s only gambit – hot on the heels of the project’s revelation Apple announced its ‘M4’ chip, which will make its debut in the new iPad Pro. In a statement, the company said the new chip represented ‘a huge leap forward’ and that as a result, the iPad Pro would be an “outrageously powerful device for artificial intelligence.”

John Ternus, senior vice president of hardware engineering at Apple added the performance of the M4 would deliver “incredible AI capabilities.” The new chip is reportedly capable of 38 trillion operations per second – less than top PC chips but a sixty-fold speed increase on Apple’s 2017 A11 chip. As Tech Radar reported:

“With 38 trillion operations a second, this is one of the fastest NPUs on the market, something that will especially help creators who are working with generative AI or AI-enhanced tools in apps like Adobe Photoshop and more.”

However, the M4 might just be a hint at bigger things to come, with bigger announcements expected in June. Speaking to TechTarget IDC analyst Tom Mainelli said:

“While they hinted at some of the AI capabilities today – aimed squarely at content creators – I suspect Apple will tell a more complete story at the Worldwide Developers Conference in June.

“And that story will include not just the iPad, but also iPhone, Mac, and its other products.”

Nvidia remains ahead for now 

Nvidia remains entrenched as the industry leader in AI and is buying up other AI firms to strengthen its grip. But given the billions which competitors are now investing in the tech, Nvidia would do well not to concede some market share to its rivals in the coming years.  However, the firms might not butt heads too harshly, with analysts saying by specialising in different areas, competitor companies can grow the size of the pie, rather than fight over the slices. As Benzinga reports:

“Apple’s move to develop in-house AI chips is part of a broader trend among tech companies to reduce their dependence on external chip manufacturers. According to a report by The Verge, companies like Google, Meta, Microsoft, and OpenAI are also working on custom server hardware to power AI models.

“This shift towards in-house development could potentially disrupt the traditional chip manufacturing industry, particularly affecting companies like NVIDIA that have a significant market share.

“But, because Apple’s new chips are likely to focus on areas outside of NVIDIA’s expertise, it’s probable that there will be space for both of the tech giants in the AI race.”

Apple slow off the mark on AI

Apple had been under fire for what critics characterised as its ‘sluggishness’ in getting to speed with AI technology. In March Business Insider reported Apple could ‘soon feel the heat’ from investors. However, those fears may now have been quashed by its latest announcements – and the expectation of more to come – which look set to propel Apple ahead in the space.  However Apple has a hill to climb, with Microsoft and Google shelling out billions on capital expenditure, much of it aimed at capturing new AI technologies, as the firms compete to get a leg up in the field.