Apple (AAPL) just revealed the company that provides artificial intelligence (AI) chips for its search functions… and it’s not Nvidia (NVDA) .
The tech sector giant has been in full focus as more and more consumers start to experience Apple Intelligence, its new generative AI platform installed in new iPhones, iPads and Mac computers.
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With the AI arms race continuing to dominate markets, Apple has made it clear that it is doubling down on this new platform. And while it hasn't revealed who makes the AI chips for Apple Intelligence, the company recently highlighted its partnership with another tech leader that has helped power many of its popular applications and could end up supplying chips for the new AI platform.
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Apple reveals longstanding partnership
Yesterday, one of Apple’s leaders revealed that Amazon Web Services (AWS) provides the company with custom AI chips for services such as search. The cloud-based computing platform is a subsidiary of Amazon (AMZN) and has worked with Apple for years, helping power programs including Siri, Apple Maps and Apple Music.
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At the AWS Reinvent Conference on Tuesday, December 3, Apple Senior Director of Machine Learning and AI Benoit Dupin discussed the benefits these AI chips have provided for Apple’s fast-growing platforms. “The infrastructure is both reliable and able to serve our customers worldwide,” he stated, adding that Apple and Amazon have a strong relationship.
Apple’s partnership with Amazon goes back roughly a decade. During this time, it has used the Amazon Inferentia and Graviton chips in programs like Siri. Amazon touts Inferentia as delivering low-cost, high-performance solutions to companies seeking to power new deep learning and generative AI models. According to Dupin, Apple has reported a 40% efficiency gain since it began using AWS AI chips.
However, Amazon’s chips may be more than just cost-effective solutions for Apple’s AI needs. Dupin also hinted that the company may be considering using the AWS Trainium2 chip to pretrain its proprietary AI models. Trained on large-scale datasets, these deep learning models can be adjusted for more specific tasks, making them more versatile.
This comes after Amazon announced this week that the new Trainium2 is available for customers to begin renting. Dupin added that Apple expects a “50% improvement in efficiency with pretraining” in the initial stage of its Trainium2 evaluation. If pretaining models on the Trainium2 goes well, it will further demonstrate the functionality of Amazon’s chips as a core component for companies seeking to develop new AI models.
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Cost-effectiveness is critical when it comes to AI model production and training. Many companies are forced to train their models on graphics processing units (GPUs) from Nvidia, which uses specialized chips to increase the speed of image and graphic processing and perform mathematical calculations.
Nvidia has effectively cornered this part of the AI market, making it a leader in AI chip production. However, its GPUs are highly priced, sparking a race among other companies to create lower-priced alternatives.
Apple’s decision to use chips from Amazon isn’t just an endorsement of AWS technology. It's an unofficial signal to Silicon Valley that companies can build and scale AI platforms with non-Nvidia technology.
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This deal’s clear winners and losers
This development well reflects the zero-sum nature of financial markets. Apple’s decision to continue using AWS AI chips to power its platforms stands to significantly benefit Amazon.
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If one of the tech sector’s leading companies opts to use them continuously, others are likely to follow. Since Amazon isn’t known as a chipmaker, Apple’s endorsement will also likely serve as a reminder to investors that it can offer valuable AI market exposure.
That said, Amazon’s gain could easily end up being Nvidia’s loss.
Any time another chipmaker takes a major step forward, it threatens Nvidia’s market share, which, until recently, has remained mostly untouched. However, if more companies opt to begin using Amazon’s chips to build and train their AI models, Nvidia could lose customers.
Many tech companies look to industry leaders for guidance on important decisions, and Apple just issued a ringing endorsement of Amazon’s AI chips.
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