Apple’s AI Ambitions Stalled by Chip Shortages, Trade Tariffs

Apple’s highly anticipated artificial intelligence (AI) update is facing unexpected delays due to internal disagreements over chip acquisition and supply chain challenges triggered by escalating U.S.-China trade tensions.

According to a report by The New York Times, Apple’s AI division has been forced to scale back its ambitions, constrained by a limited number of high-performance GPUs and a corporate decision not to expand current chip inventories.

In 2023, Apple SVP John Giannandrea proposed a significant expansion of the company’s GPU resources to accelerate the development of generative AI tools. This included enhancements to Siri, more personalized device experiences, and advanced on-device AI models. However, internal budgetary friction disrupted those plans.

Although CEO Tim Cook reportedly supported the proposal to increase AI spending, CFO Luca Maestri objected to the high cost of acquiring additional GPUs. Instead of purchasing tens of thousands of new chips, Apple leadership insisted the AI division work with what it had — approximately 50,000 GPUs.

Many of these units are years old and less efficient compared to the hardware used by competitors such as Microsoft and Google. While Apple’s rivals invested aggressively in large-scale data center infrastructure with cutting-edge Nvidia chips, Apple’s AI development has been confined to a smaller footprint.

The immediate fallout of the GPU shortage has been a slowdown in software development. Internally, teams working on Siri enhancements found that the revamped assistant frequently returned inaccurate responses during testing. As a result, key AI features initially slated for early 2024 have been repretedly postponed.

Apple now says the improved Siri and other generative AI capabilities will arrive “later this year” — a vague timeline that underscores the company’s mounting technical challenges.

These internal issues are unfolding against the backdrop of renewed U.S.-China trade tensions. President Donald Trump’s reimposed tariffs on Chinese electronics imports has throen a wrench into Apple’s supply chain.

Apple, which assembles the vast majority of iPhones in China, could now face import tariffs as high as 145%, potentially adding hundreds of dollars to the cost of high-end devices.