Apple’s strong bet on artificial intelligence (AI) chips has led to its position as the top customer for Taiwan Semiconductor Manufacturing Company, despite bleeding on its own product sales growth.
The iPhone maker has been facing tough competition in its Chinese market as the Samsung 5G phone has surpassed it and become the market leader. Weak domestic demand is further curtailing revenue, particularly for the iPad and wearables categories, which saw negative growth. Yet it has been doubling down on its partnership with TSMC, promising to buy from its U.S. government-subsidized foundries despite increased costs, and even eyeing the unreleased 2m chip, three months after it had bought TSMC’s 3m chips.
Analysts believe that Apple is banking on AI as the main way to revive demand for its products. After facing a few setbacks in the generative AI space with the overnight success of competitor products GPT and Gemini, the company has been working to catch up with its rivals like Samsung, which have already started incorporating large-language models into its latest phones.
As its manufacturer TSMC sees even more sales growth on the horizon, Apple is hoping to ride the AI wave. Apple represented 25% of TSMC’s revenue in 2023 and is planning on incorporating AI chips into its newest Macbooks, which grew one percent this quarter.
Apple CEO Tim Cook teased that the company will reveal robust plans for AI development later this year.