Apple is reportedly moving toward using its own chips in servers designed to support generative AI features for MacBooks and other devices, and it’s looking to Foxconn for help in doing so. Used to be. Apple has reportedly engaged Foxconn to explore manufacturing AI servers in Taiwan. Foxconn is not only Apple’s primary iPhone maker, but it also leads the production of Nvidia’s AI servers.

According to a recent report from Nikkei, the company is exploring AI server production, however, Apple’s estimated order volume remains modest compared to the growing demand for Nvidia’s high-performance GB200 AI server.

Apple’s decision to consider Taiwan as a production base is strategic; The company hopes to leverage the region’s engineering talent and R&D resources to support this venture. While Apple is renowned for its expertise in consumer electronics, it lacks Nvidia’s depth in designing servers for AI-powered data centers, which may require Foxconn’s additional support and expertise.

By collaborating with Foxconn, Apple aims to advance its AI server capabilities amid growing competition in AI infrastructure from its biggest competitors, including Microsoft, Amazon and Google, all of which are investing heavily in AI data centers.

However, Foxconn’s production capacity may be reduced. Along with its commitment to produce Nvidia’s AI servers, Apple has reportedly sought additional support from China’s Lenovo and its subsidiary LCFC, as well as smaller suppliers such as Universal Scientific Industrial. The tech giant has also considered expanding server production capabilities in Southeast Asia and exploring options outside China to diversify its supply chain.

Building an AI server is proving to be a more complex endeavor than initially anticipated. Only a few manufacturers, including Foxconn, Quanta, Wistron, and Supermicro, currently have the expertise to produce Nvidia’s advanced AI servers. Due to these manufacturers being largely contracted by Nvidia, Apple’s entry into AI server production may face capacity shortages in the supply chain.

While the reported discussions between Apple and Foxconn are still in the early stages, given Apple’s long-standing partnership with Foxconn, it is likely that Foxconn will accept Apple’s AI server orders, even if they are relatively small. . The big picture?: This is a big step for Apple, as increasing AI server capabilities becomes critical for the future and gives the company a competitive position in AI-driven markets.