Apple Plans AI Server Production with Foxconn, Using In-House Chips

Apple is taking steps to develop its own AI servers, potentially revolutionizing its AI capabilities by using custom-designed chips. Partnering with Foxconn, Apple is reportedly exploring AI server production in Taiwan, aiming to enhance the infrastructure supporting generative AI features for MacBooks and other devices. Foxconn, Apple’s long-time iPhone manufacturer, is also a leader in producing Nvidia’s AI servers, which makes it a strategic partner for Apple’s new venture.

According to a report from Nikkei, Apple’s plans involve starting with a modest volume of AI servers compared to the high demand for Nvidia’s powerful GB200 servers. Nevertheless, Apple sees Taiwan as an ideal production base due to its engineering talent and strong R&D resources. Apple is known for innovation in consumer tech, but developing AI servers for data centres is relatively new territory. This is where Foxconn’s expertise becomes essential, allowing Apple to compete with tech giants like Microsoft, Amazon, and Google, which are heavily investing in AI data centres.

However, Foxconn’s capacity is already stretched, mainly due to its commitments to Nvidia’s AI servers. Consequently, Apple is reportedly seeking additional manufacturing support from Lenovo’s subsidiary LCFC and other suppliers such as Universal Scientific Industrial. This diversification could help Apple meet production demands while reducing its dependence on any single location, primarily as it explores production expansion into Southeast Asia, reducing its reliance on China.

Building AI servers is a complex task that only a few companies—like Foxconn, Quanta, Wistron, and Supermicro—currently excel at. Given that these manufacturers are already producing for Nvidia, Apple might face challenges securing enough production capacity. Despite these hurdles, the longstanding relationship between Apple and Foxconn makes it likely that Foxconn will prioritize Apple’s orders, even if they start at a smaller scale.

If successful, Apple’s AI server initiative marks a strategic shift in the company’s approach to AI. By investing in AI server infrastructure, Apple could achieve more control over its AI capabilities and strengthen its competitive position in the growing AI-driven market. Although these discussions are in the early stages, Apple’s move could signify a significant step toward expanding its influence in AI and cloud-based technology.