Apple could spend $5B on servers to catch up in AI race
Apple's attempts to catch up with the rest of the market in the generative AI field could cost more than first thought, with it potentially spending more than $5 billion over two years just on servers.
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On Sunday, it was reported Apple has committed to spending in the region of a billion dollars annually just on its AI efforts. In a Monday post, TF Securities analyst Ming-Chi Kuo proposes the amount could be much higher than that.
Writing on Medium, a survey by Kuo reveals Apple intends to purchase between 2,000 and 3,000 AI servers in 2023, and possibly between 18,000 and 20,000 servers in 2024. These figures are said to represent 1.3% and 5% of worldwide AI server shipments in their respective years.
Kuo thinks it is "reasonable to assume" that Apple's AI server choices will be the "most popular specification" of the year, using Nvidia's HGX H100 8-GPU. For late 2024, Apple may upgrade to a "B100 solution."
With a price of around $250,000 per HGX H100 8-GPU server, it's estimated that Apple will spend around $620 million in 2023, and $4.75 billion in 2024 on AI servers alone. This works out to be about $5.37 billion over two years.
The lower spending in 2023 than 2024 is down to a shortage of Nvidia AI chips, as well as Apple "placing its orders later than other major customers."
Despite seeming like a great expense, Kuo thinks the purchases are still far behind other companies. As examples, Meta will allegedly be buying around 40,000 AI server units in 2024, while Microsoft plans between 80,000 and 100,000 units in the same year.
This may not be an issue for Apple with its lower number of orders, as Kuo believes it's "not appropriate to compare" with Microsoft, since it is assumed Apple won't offer services like cloud hosting of AI projects.
Privacy, flexibility, and more expense
Kuo thinks that Apple prefers to train its large language models on AI servers it has purchased and installed itself rather than using virtual hosts in the cloud, citing security, privacy, and "design flexibility" behind the move.
Though Apple's AI infrastructure and computing power won't be as high as competitors who have already made a head start, Kuo thinks this means Apple thinks "it must have superior software development capabilities to catch up."
Kuo points out that the purchase of servers doesn't include other costs that Apple could incur, including labor and the cost of operating its infrastructure. It's therefore "reasonable to estimate" that Apple could be spending several billion dollars annually to catch up with its rivals.
There is also a mention to Sunday's report, with Kuo offering "If Apple really intends to spend only a billion dollars a year on generative AI development, it won't matter much if my survey is wrong, but I am genuinely concerned about the future of Apple's generative AI business/service."
Kuo also accepts that Apple "can develop its own AI server chips to save on AI server procurement costs." While plausible, Kuo says "the visibility of the development is not clear at present."
Read on AppleInsider
Comments
https://www.youtube.com/watch?v=5dhuxRF2c_w&pp=ygUMb3B0aW11bSB0ZWNo 13:12 mark high wattage and MHz at all cost Apple isn’t on that path…… Long term Apple appears to building up from ground level with a different solution.
https://www.notebookcheck.net/Disappointing-Core-i9-14900K-performance-watt-vs-Ryzen-7-7800X3D-showcased-as-Intel-CPU-appears-to-guzzle-energy.761067.0.html
https://www.reddit.com/r/hardware/comments/17esez1/exclusive_nvidia_to_make_armbased_pc_chips_in/ Opps, Nvidia wants to make Arm chips I think that cancels them out.
What can be better than having more than 500 stores around the world showing off the Apple Vision Pro with that new user interface call it Apple AI if you want, but to the public it’s not gonna matter, what will matter is how it works upfront and personal as if by magic, where you just simply rub/softly tap two fingers together and have a command executed on the screen, what can be better? Nvidia’s who? back room shenanigans won’t matter.
I also think AI have more benefits for customers than the Apple Vision Pro does today. We'll have to wait and see what happens. And like it or not, Nvidia is miles ahead of Apple in AI, and today it matters.
Now Apple just happens to sit on one of the world’s best silicon teams. Apple may want to do a Tesla like Dojo sprint and roll their own server side AI silicon or even license/partner with Tesla on it.
If they can pull this off then it feels like the sustainable move. Nvidia needs a strong counter weight.
They definitely don't have everything in house to produce the necessary systems.
It takes much, much more than silicon. You really need a complete platform to work from.
Nvidia has CUDA-X
Huawei has CANN
Should Apple be working to that end? I think so but to date they have shipped nothing comparable while others have been around for years now.
I think it's not too wacky to believe Apple was wrong-footed on this one and probably had an all-hands meeting last year to plan how to resolve the situation.
Is it possible that the early 'reveal' of Vision Pro was to deflect from where it was lacking in the latest AI moves?
That may be bordering on wackiness but you never know.
What’s gonna be fun next year is watching the release of the Apple Vision Pro and seeing native small to medium sized companies, releasing programs which will show what it means being a vertical computer company (Apple) that is able to create new ecosystems is all about, and Googles, or Microsoft only response, in that new Apple ecosystem is to flood the market with their existing parasitic reduced feature (in comparison to what’s on their platform) from their existing ecosystems.
At the college level these days, it’s a new world if you use a Apple Mac computer or an iPad Pro the number of very good programs for taking notes, writing essays term, papers, or technical papers, and that vertical computer platform created by Apple allows many people to excel away from the plug and have long battery life in the process that’s what a vertical computer company does gives you the power to design beyond that barn burning must be plugged into a wall Microsoft computer.
P.S. Apple isn’t the company camping out in the ecosystems of Google and Microsoft they don’t need to, nor are they paying either of them $20 billion a year for a default position within their vertical computer ecosystem…. the benefits are all Apple I don’t think Apple is behind. They’re just on the different path that doesn’t involve burning down the barn, the ecosystem squatters in this game is Microsoft and Google.
Nvidia hopes/plans that you will be buying those barn burning chips/systems from them, of course you’ll have to do all of the real integration into your operating system/server farm depending on how you wanna work it, as long as you paid them and the power company they don’t care.
My thought too.
Could you imagine an announcement of Apple Silicon AI.