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Apple is reportedly spending billions of dollars on its AI server investments this year and in 2024. However, despite the seemingly overwhelming amount, supply chain analyst Ming-Chi Kuo believes Apple still can’t compete with competitors’ AI server purchases.

The report follows an earlier revelation by Bloomberg’s Mark Gurman, saying three Apple SVPs would be spending about $1 billion per year for the AI tasks given to them. According to Kuo, Apple will spend $620 million in 2023 for AI servers, which will reportedly be followed by $4.75 billion in 2024.

Kuo believes Apple’s investment this year would be in Nvidia’s HGX H100 8-GPU, which is well-known for generative AI training. Next year, however, the iPhone maker will reportedly upgrade some shipments to the B100 solution.

The report specifies that the amount will bring Apple 2,000–3,000 and 18,000–20,000 units of AI servers in 2023 and 2024, respectively. However, the figures only represent about 1.3% and 5% of AI server shipments globally in 2023 and 2024, respectively. Kuo notes that the smaller budget of Apple this year for AI servers could be justified by the Nvidia AI chip shortage and the company’s late order placing. Nonetheless, the analyst underscores that the number of units Apple plans to have in 2024 is still lower than rivals.

“Taking Meta as an example, its AI server purchase in 2024 will be about 40,000 units. Not to mention, Meta’s AI server count before 2024 already far exceeds that of Apple,” Kuo says in the report. “Assuming that Apple doesn’t provide services such as cloud hosting, it’s not appropriate to compare Microsoft (with AI server purchases of about 80,000–100,000 units in 2024) with Apple.”

Aside from the number of units, Kuo believes that there are other areas Apple has to address to completely catch up with rivals in the AI market.

“Apple’s AI infrastructure computing power is less than its major competitors, which means that it must have superior software development capabilities to catch up,” adds Kuo. “The above does not consider other costs (such as labor costs, infrastructure operating costs, etc.). Thus, it’s reasonable to estimate that Apple would have to invest at least several billion US dollars annually to have a chance of catching up with its competitors. If Apple really intends to spend only a billion dollars a year on generative AI development, it won’t matter much if my survey is wrong, but I am genuinely concerned about the future of Apple’s generative AI business/service. I know some will argue that Apple can develop its own AI server chips to save on AI server procurement costs. While I agree this is a noteworthy trend, the visibility of the development is not clear at present.”


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