From: allin
Apple is reportedly developing its own AI server chips for internal use [00:52:52]. These inference chips, codenamed “Balta,” are being developed with assistance from Broadcom and TSMC [00:55:00]. Mass production is anticipated to begin in 2026 [00:55:23].
Strategic Rationale
Apple does not intend to sell these chips or offer cloud computing services with them [00:55:30]. The primary motivation is to position the iPhone as the main AI interface, emphasizing privacy and localized AI operations on the user’s device without constant access to personal data [00:55:37].
Current Software and Hardware Challenges
Despite their advancements, Apple faces challenges with its current software experience. Users have reported issues with iOS 18, including the phone not working properly for calls, constant bricking, and the Photos app crashing [00:44:48]. The “Apple Intelligence” features are also noted as not working effectively [00:50:29]. These issues suggest a decline in the polished user experience traditionally associated with Apple products, raising concerns about the company’s focus on quality amidst the race to implement AI features [00:45:12].
A major contributing factor to these issues is seen as Apple’s departure from a strong “taste” or design intuition that characterized its past leadership [00:51:22]. Unlike many tech companies that rely on data to measure user experience and success, Apple has historically prioritized design “taste” [00:51:40]. Without the guiding “taste” of former leaders like Steve Jobs or Jony Ive, and without robust data-driven feedback mechanisms, Apple’s software quality has reportedly suffered [00:51:52]. This reliance on “taste” makes scaling and maintaining product quality difficult when that core “taste” diminishes [00:52:13].
Vertical Integration
Apple’s strategy revolves around vertical integration, controlling both hardware and software [00:46:06]. This approach aims to create a competitive advantage that can last for decades by developing chips specifically tailored for its interfaces and user experiences [00:46:20]. While this strategy demands significant resources and different skill sets across teams, it is seen as crucial for creating the “best possible companies” [00:46:48]. This long-standing strategy, advocated by Steve Jobs, continues to be a core principle for Apple [00:48:02].
Despite the advantages of vertical integration, this strong competitive moat can lead to internal sloppiness over time, as the company may not feel the immediate pressure to compete at the “cutting edge” in all areas [00:48:30]. This could explain some of the reported software issues, as the organizational structure might lack the intense pressure for perfection seen in earlier eras [00:49:58].