Apple's AI Leap Spurs Taiwan Chipmaking Revolution

Published Date: 04/07/2024

Apple's new artificial intelligence features, dubbed 'Apple Intelligence', could be a major win for Taiwan Semiconductor Manufacturing Co.

Apple's bet on its own chips is a significant development, and it means Taiwan Semiconductor Manufacturing Co. (TSMC) stands to benefit. At its Worldwide Developers Conference, Apple unveiled its new artificial intelligence features, dubbed 'Apple Intelligence', which includes text generation and summarization across apps, advanced AI-assisted photo editing capabilities, and a much smarter and more powerful Siri. This technology is integrated with third-party services like ChatGPT for more advanced prompts.\n\nWhat makes Apple Intelligence so compelling is the amount of AI processing it does on the device. Instead of taking a query, sending it to a server, and then downloading the results, the entire process happens on the iPhone, Mac, or iPad. This development could push other device makers to buy more advanced chips from TSMC.\n\nApple is ushering in the next phase of artificial intelligence known as edge AI, where data and algorithms are processed directly on the end device. This means hardware that's even just a few years old might not be able to handle AI requests as well as newer devices can. Apple is limiting Apple Intelligence features to the iPhone 15 Pro, iPhone 15 Pro Max, and the forthcoming iPhone 16 devices.\n\nAs a result, Apple could see strong demand from users eager to upgrade their phones over the next few years as Apple Intelligence features roll out around the world. And more iPhone sales means more demand for TSMC's chips. TSMC doesn't just supply chips for Apple, it manufactures the majority of chips in the world, accounting for over 60% of the market.\n\nIn order to support third-party large language models and its own more advanced LLM, Apple created Private Cloud Compute (PCC). The system uses Apple servers that also deploy the tech titan's own chip designs. This could further increase Apple's demand for TSMC's services and offers another way for Apple to generate income from developers.\n\nTSMC already has a market cap of around $900 billion. Shares look undervalued at today's price given the growth potential spurred by continued demand for AI chips.

FAQs:

Q: What is Apple Intelligence?

A: Apple Intelligence is a set of artificial intelligence features unveiled by Apple that includes text generation and summarization across apps, advanced AI-assisted photo editing capabilities, and a much smarter and more powerful Siri.

Q: What is edge AI?

A: Edge AI is a phase of artificial intelligence where data and algorithms are processed directly on the end device, such as a smartphone, tablet, or personal computer.

Q: What is Private Cloud Compute (PCC)?

A: Private Cloud Compute is a system created by Apple to support third-party large language models and its own more advanced LLM. It uses Apple servers that also deploy the tech titan's own chip designs.

Q: What is the market cap of TSMC?

A: The market cap of TSMC is around $900 billion.

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