Apple already uses server infrastructure built on its proprietary M2 Ultra chips for artificial intelligence systems and, often, for Apple Intelligence services. In the future, the company intends to upgrade these servers to more recent and powerful M4 Ultra chips. The company approached Foxconn and Lenovo with a proposal to start production of such machines, noting that production needs to be established in Taiwan, Nikkei reports.

Image source: apple.com

The production of AI servers in Taiwan will help reduce Apple’s dependence on China, and Foxconn will be able to use the resources and developments used in the production of servers based on Nvidia accelerators. There may be difficulties with this: Foxconn’s capacity in Taiwan is limited, because the company is loaded with orders for the production of servers with Nvidia H100 and H200 accelerators and is preparing to move on to mass production of equipment based on GB200.

Apple’s approach to AI differs from that of traditional cloud service providers such as Microsoft and Amazon – Apple prioritizes outputting AI applications rather than training systems. Therefore, equipment with complex technologies, including liquid cooling, will not be needed. In addition, Apple’s internal AI servers are needed in much smaller volumes than Nvidia’s GB200 machines, while Foxconn and Lenovo prefer customers with large orders. But Apple’s Intelligence service appears promising and its user base is likely to grow, so even with this order, Apple will remain a profitable customer.

Apple’s experience in designing data center servers is inferior to Nvidia’s, so the company is seeking engineering and design support from manufacturers. On the other hand, these will be less powerful and simpler machines compared to Nvidia GB200 servers, so the development and testing process will be relatively quick. Foxconn appears to be the main candidate as an old partner of Apple, but due to the high utilization of the company’s Taiwanese facilities, negotiations are also underway with Lenovo and its subsidiary LCFC, which can help design servers. To reduce dependence on Chinese suppliers, Apple and Lenovo are discussing launching additional production facilities outside of China. Smaller suppliers, such as Universal Scientific Industrial, are also being considered to support production.

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