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Apple's efforts to catch up with the rest of the market in generative artificial intelligence may cost more than first thought, with the company potentially spending more than $5 billion over two years on servers alone.
On Sunday it became known that Apple has committed to spending about a billion dollars annually on its developments in the field of artificial intelligence alone. In a note on Monday, TF Securities analyst Ming-Chi Kuo suggested the amount could be much higher than that.
A survey conducted by Kuo on Medium shows that Apple intends to purchase 2,000 to 3,000 AI servers in 2023 and possibly 18,000 to 20,000 servers in 2024. The figures are said to be 1.3% and 5%. deliveries of artificial intelligence servers worldwide in the corresponding years.
Kuo says it's “reasonable to assume” Apple's AI server selection will be the “most popular specification” of the year, using Nvidia's 8-GPU HGX H100. At the end of 2024, Apple may switch to the “B100 solution.”
At around $250,000 for the 8-GPU HGX H100 server, it is estimated that Apple will spend around $620 million in 2023 and $4.75 billion in 2024 on AI servers alone. That would amount to about $5.37 billion over two years.
The lower costs in 2023 compared to 2024 are due to a shortage of Nvidia AI chips, as well as Apple “placing orders later than other large customers.”
Even though the costs seem huge, Kuo believes these purchases still lag far behind other companies. For example, Meta is expected to buy about 40,000 AI servers in 2024, while Microsoft plans to buy between 80,000 and 100,000 units in the same year.
This may not be an issue for Apple with its fewer orders, as Kuo believes comparisons with Microsoft are “inappropriate” since Apple is not expected to offer services such as AI cloud hosting. projects.
Privacy, flexibility and additional costs
Kuo believes that Apple prefers to train its large language models on artificial intelligence servers it has purchased and installed itself rather than using virtual hosts in the cloud, citing security, privacy and “design flexibility.”
Although Apple's artificial intelligence infrastructure and computing power won't be as high as competitors that have already achieved success, Kuo believes this means Apple believes “it should have superior software development capabilities.” provision to catch up with her.”
Kuo notes that the purchase of servers does not include other costs that Apple may incur, including labor and the cost of operating its infrastructure. So it's “reasonable to assume” that Apple could spend several billion dollars annually to catch up with its competitors.
Sunday's report also includes a reference in which Kuo suggests: “If Apple really only intends to spend a billion dollars a year developing generative AI, it won't matter much if my survey turns out to be wrong, but I am truly concerned about the future of Apple's generative AI business/services.”
Kuo also admits that Apple “may develop its own AI server chips to save on the cost of purchasing AI servers.” While this is plausible, Kuo says that “the visibility of development is currently unclear.”
Rumour assessment
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