Apple is working on AI chip with Broadcom, the Information reports
Adds background in paragraphs 7-11
Dec 11 (Reuters) -Apple AAPL.O is working with Broadcom AVGO.O to develop its first server chip specially designed for artificial intelligence processing, the Information reported on Wednesday, citing people with direct knowledge of the matter.
The reported move would align the iPhone maker with other big technology companies that have developed their own chips to power compute-heavy AI services and reduce reliance on Nvidia's NVDA.O pricey and short-in-supply processors.
Apple's AI chip is internally code-named Baltra and is expected to be ready for mass production by 2026, the report said.
To make the chip, the company is planning to use one of Taiwan Semiconductor Manufacturing Co's 2330.TW most advanced manufacturing processes, known as N3P, the report said.
Apple and Broadcom did not immediately respond to Reuters' requests for comment. Broadcom shares rose 5% after the news.
Last year, Apple had signed a multi-billion-dollar deal with the chipmaker to develop 5G radio frequency components.
Apple had said at its annual developer conference in June that it plans to use its own server chips to help power AI features on its devices.
The company has had success in recent years in developing in-house chips for its devices, including the M-series of processors that replaced Intel INTC.O chips in its Mac laptops.
Still, some big tech companies have found it hard to cut reliance on Nvidia despite in-house efforts, barring Google, which also works with Broadcom for its AI chips.
The push by big cloud providers to diversify their supply chains has turned Broadcom into one of the biggest beneficiaries of the generative AI boom. Its shares have gained 54% in 2024, after almost doubling in value last year.
Broadcom's central competitor in this space is Marvell MRVL.O. The total market for custom chips could grow to about $45 billion by 2028 and be split between the two companies, Marvell Chief Operations Officer Chris Koopmans said earlier this month.
Reporting by Harshita Mary Varghese and Aditya Soni in Bengaluru; Editing by Shilpi Majumdar
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