Apple's AI Strategy Rethink

Apple is reportedly re-evaluating its AI strategy, experiencing significant internal disruption following the departure of Ruoming Pang, a key figure in its AI foundation models team. The company is now exploring the integration of external AI models, including those from OpenAI and Google, to enhance Siri and other AI functionalities. This shift comes after internal disagreements regarding the release of Apple's AI models as open source and concerns about performance compromises required to run them efficiently on iPhones.

Apple's AI team had aimed to release some models as open source to demonstrate progress and encourage external collaboration. However, executives reportedly blocked the move, fearing exposure of performance limitations when running the models on mobile devices. The company is now testing external models to power Siri, a move that has reportedly caused dismay within the internal AI team. Apple is also said to be re-evaluating compensation for remaining foundation model team members to retain talent.

This potential shift towards external AI solutions marks a significant change for Apple, which has traditionally relied on in-house technology for its AI features. Analysts suggest this move indicates potential struggles within Apple's internal AI development. It could also lead to increased capital expenditure and impact free cash flow if Apple needs to rely on third-party infrastructure, such as Nvidia, to run AI data centres.