Apple is shopping for an AI chip company — and it's willing to spend billions

Apple is shopping for a chip company. According to The Information, people familiar with the matter say the iPhone maker has spent recent months talking to bankers about potential deals and reaching out to semiconductor startups to gauge their interest in being acquired.

The push comes as Apple grapples with performance issues inside its AI server infrastructure. Building its own server chips for artificial intelligence has become a priority, and the company appears to have concluded that buying existing silicon expertise is faster than growing it internally.

Apple has already shown it’s willing to write bigger checks. In January, it closed a $2 billion deal to acquire Q.Ai, an Israeli machine-learning company that specializes in reading speech through facial micro-movements. That acquisition was the second-largest in Apple’s history, behind only the $3 billion Beats purchase in 2014.

The Q.Ai deal is instructive. Apple bought PA Semi in 2008 for roughly $278 million — a small purchase that eventually led to the A-series processors and, later, the full Apple Silicon transition across Macs. The company seems to be betting that a similar playbook could work for AI infrastructure.

What’s different this time is the scale. Apple has historically kept its acquisition targets in the hundreds of millions. But the company is now preparing for deals worth tens of billions of dollars, according to people familiar with Apple’s thinking. That would put potential targets in the same league as its Beats and Q.Ai acquisitions — or larger.

The shift in strategy was telegraphed in Apple’s second-quarter earnings call. CFO Kevan Parekh signaled that Apple is moving away from its long-standing cash neutrality policy, which kept debt and cash reserves roughly balanced. The change means Apple is willing to dip into its substantial cash pile for major purchases instead of keeping it locked up.

Apple’s AI chip ambitions face real urgency. The company has been playing catch-up in large language models and generative AI, areas where competitors like Google, Microsoft, and Meta have been building custom server silicon for years. An acquisition — or several — could accelerate Apple’s timeline significantly.