Apple is preparing to mass-produce its own AI-focused server chips in the second half of 2026 amid reliance on a short-term partnership with Google to meet immediate AI expectations, according to analyst Ming-Chi Kuo.


In a new post on X, Kuo said that Apple is facing mounting short-term pressure in artificial intelligence that is shaping its current strategy, even as it continues to pursue long-term control over core AI technologies.

Kuo explained that Apple has encountered two immediate challenges in its in-house AI development that have effectively pushed it toward partnering with Google. The first is the need for a credible AI showing at WWDC later this year after previously announcing Apple Intelligence and significant Siri upgrades that have yet to materialize. The second is the rapid pace of improvement in cloud-based AI systems, which has raised expectations to a level where simply delivering on earlier promises may no longer be enough.

Kuo argues that as AI capabilities have advanced, user perceptions of what constitutes a competitive assistant or system-level AI have shifted. In that context, even a fully delivered version of ‌Apple Intelligence‌ as it was originally presented could struggle to stand out, particularly without access to more powerful large-scale models. This has apparently driven an urgent need for Apple to supplement its current approach with more capable AI models from other companies.

Kuo described Apple's AI deal with Google as a way to ease short-term pressure rather than a long-term strategic shift. He said on-device AI is unlikely to drive hardware sales in the near term, but the partnership gives Apple time to manage expectations across its platforms while continuing its own AI development. Over the longer term, Kuo said AI is expected to become central to hardware differentiation, operating system design, and the overall user experience, making ownership of core AI technologies increasingly important.

He added that Apple's in-house AI server chips are expected to enter mass production in the second half of 2026, with Apple-operated data centers coming online in 2027. Kuo said this timing suggests Apple expects demand for on-device and hybrid AI workloads to grow more meaningfully from 2027, as it gains greater control over its server-side computing and infrastructure.
This article, "Kuo: Apple's AI Deal With Google Is Temporary and Buys It Time" first appeared on MacRumors.com

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Apple's Mac business ended 2025 with flat year-over-year shipments in the holiday quarter despite a broader rebound in the global PC market, according to the International Data Corporation (IDC).


The findings suggest that global PC shipments rose 9.6% year over year in the fourth quarter of 2025 to 76.4 million units, exceeding expectations as brands accelerated purchases ahead of anticipated supply constraints and component price increases. Within that total, Apple shipped 7.1 million Macs during the quarter, which is essentially unchanged from the same period a year earlier, resulting in a decline in quarterly market share even as the overall market expanded.

Apple ranked fourth globally behind Lenovo, HP, and Dell, all of which posted double-digit shipment growth. Lenovo shipped 19.3 million units in the fourth quarter of 2025, up 14.4% year over year, while HP shipped 15.4 million units, up 12.1%. Dell recorded the fastest growth among the top three at 18.2%, with 11.7 million units shipped.

IDC attributed the stronger-than-expected fourth quarter to factors including the end of support for Windows 10, tariff-related uncertainty earlier in the year, and growing concern over tightening memory supply. These dynamics encouraged many vendors to pull forward inventory purchases into late 2025, amplifying the usual holiday period seasonal uplift.

For the full year, Apple's performance was more robust. IDC estimates that Apple shipped 25.6 million Macs in 2025, up from 23.0 million units in 2024, representing year-over-year growth of 11.1%. That increase outpaced the overall PC market, which grew 8.1% to 284.7 million units globally. Apple's annual market share rose to 9.0% from 8.7% the year before, even as its fourth-quarter share fell to 9.3% from 10.2% in the fourth quarter of 2024 due to faster growth by major Windows brands.
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Apple's U.S. patent activity declined sharply in 2025 amid a broader slowdown in patent filings, according to newly released data from IFI CLAIMS Patent Services.


The data shows that Apple was granted 2,722 U.S. patents in 2025, down from 3,082 in 2024, a year-over-year decline of roughly 12% that pushed the company down two positions to sixth place in IFI's annual ranking of the top 50 recipients of U.S. patent grants. The shift marks a notable change for Apple at a time when its spending on artificial intelligence, silicon design, and software continues to expand, but it also reflects a wider contraction in patent activity across the United States.

Total U.S. patent grants in 2025 fell to 323,272, a decline of less than 1% from the previous year, while U.S. patent applications dropped more steeply, falling 9% to 393,344. IFI noted that the decline in applications represents the lowest level since 2019, following a record high in 2024. The data is compiled directly from the U.S. Patent and Trademark Office and forms the basis of IFI's annual Top 50 and Top 10 Fastest Growing Technologies reports.

The slowdown was visible across core technology areas that typically account for a large share of U.S. patents, with filings and grants falling in key categories such as digital data processing and data transmission. The slowdown was not limited to Apple, with other major U.S. technology companies such as Google also falling in the patent rankings in 2025, while Nvidia did not receive enough U.S. patent grants to place in the Top 50 despite its central role in the AI boom.

It also came as the U.S. Patent and Trademark Office continued to work through a backlog of more than 1.2 million applications, which has delayed the pace at which patents are issued. While U.S.-based companies still received the largest number of patents overall, their total fell by more than 5% in 2025, even as companies in several Asian countries increased their patent counts.

Apple's decline occurred as several competitors either held steady or increased their patent output. Samsung retained the top position for the fourth consecutive year with 7,054 U.S. patent grants, accounting for more than 2% of all patents issued in the United States in 2025. Apple chip supplier Taiwan Semiconductor Manufacturing Company (TSMC) ranked second with 4,194 grants, followed by Qualcomm in third place with 3,749.

Apple's drop contrasted with gains by companies such as Dell and Toyota, which moved up eight and six places respectively, driven largely by patents related to computing infrastructure, energy storage, and vehicle systems. Key areas of research in 2025 included AI and battery technologies.
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A detailed new report from SemiAnalysis argues that while Apple's partnership with TSMC created the modern leading-edge foundry model, the rapid rise of AI computing is changing who pays for new chip technologies and how much influence Apple holds over each new manufacturing node.


The report traces how Apple became the single most important customer in the global semiconductor industry by committing early and at scale to new manufacturing processes at TSMC, beginning with the A8 chip in 2014. It argues that Apple's willingness to absorb early costs, fund yield improvements, and align its annual product cycle with TSMC's roadmap allowed the foundry to outpace rivals and cement its dominance at the leading edge.

Apple's annual spending at TSMC grew from roughly $2 billion in 2014 to about $24 billion in 2025, while Apple's share of TSMC revenue rose from single digits to as much as 25% at its peak. For much of the past decade, Apple accounted for more than half of initial production at each new node, and in some cases nearly all of it, effectively underwriting the financing of advanced manufacturing when no other customer could do so at scale.

However, the rise of AI accelerators has created a second class of customers, such as NVIDIA, who are capable of consuming large amounts of advanced manufacturing capacity. TSMC's revenue mix has shifted significantly as a result.

Smartphones once represented nearly half of TSMC's revenue, but that share has fallen as high-performance computing demands, including AI, have grown to become the largest segment. This means Apple is no longer the only customer capable of funding new capacity, even though it remains the largest single customer by revenue.

This change is said to already be visible with upcoming manufacturing nodes. Apple's share of early production for TSMC's N2 and A16 nodes is expected to be lower than previous generations, the latter of which is designed for high-performance computing workloads rather than mobile devices.

Under SemiAnalysis's modeling, Apple's position strengthens again at later nodes such as A14, which are being designed from the start to support both mobile and high-performance products. In that scenario, Apple's share of early capacity rises again as its iPhone and Mac chips return to being the primary drivers of volume.

While Apple continues to rely on TSMC for its most advanced chips, SemiAnalysis says the company is exploring alternatives for lower-risk components and certain categories to diversify its supply chain. Intel's upcoming 18A-P process is a potential option for some Apple silicon without disrupting flagship products.

See SemiAnalysis's full report for more information.
This article, "Report: Rise of AI Is Corroding Apple's Influence Over TSMC" first appeared on MacRumors.com

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