News & Analysis

Apple’s $22.6 Bn AI Secret

Ever since Generative AI came calling, all eyes are Big Tech companies and their strategies around the business. All except Apple

Ever since generativeAI came calling with ChatGPT in November last year, pretty much every big tech company has announced its plans around it. All, barring Apple, which has maintained a studious silence around artificial intelligence. However, now it appears as though Apple was merely not keen to announce its efforts thus far. 

Now, Apple CEO Tim Cook has revealed that the company has earmarked a whopping $22.6 billion on research and development for the year, a good $3 billion more than last year’s figure and some of this would be around generative AI. “We’ve been doing research across a wide range of AI technologies, including generative AI, for years,” Cook has said. 

No worries, says Tim Cook

In an interview with Reuters, Cook said Apple was investing a lot and it is now showing up in the R&D spending that can be seen in their balance sheets. Of course, as is their wont, Apple has not mentioned anything specific about what or how they’re working on or how generative AI would be used by their product lines. 

This is in sharp contrast to some of Apple’s competitors who’re blowing their respective trumpets from the rooftops around AI opportunities and their targets. While arch rivals Microsoft have already spent $10 billion on OpenAI, the company doing pioneering research on generative AI, Google too has joined the AI arms race, with new products on the market. 

In response, Apple has been silent on its efforts and also avoided sharing any of it with the public, as was evident from the fact that they didn’t make a single reference to generative AI during last June’s WWDC keynote. It also did not figure in the company’s latest earnings call till an analyst specifically raised a question around it. 

To this query, Cook responded by stating that the technology was “absolutely critical” for the company and that Apple viewed AI and machine learning as integral to virtually every product in their stables. In fact, a report by Bloomberg said the company was working on new AI tools that have been dubbed Apple GPT with the focus on large language models. 

The AI-led shift could be critical for Apple

The company’s AI-led offerings could prove critical in the next few quarters given that Apple sales for the third quarter ended July 1 actually fell 1.4% to $81.8 billion where weaker iPhone sales were offset by strong performances around Apple TV Plus and sales in China, which rose 8% year on year after dropping off for several quarters. 

Which is where Tim Cook’s explanation that increased spending on R&D was partly driven by work on generative AI brought some cheer to the industry. Given allround euphoria around AI amongst most tech giants in the world, Apple’s silence was being perceived as a failing that could potentially take away its luster. 

“We’ve been doing research across a wide range of AI technologies, including generative AI, for years. We’re going to continue investing and innovating and responsibly advancing our products with these technologies to help enrich people’s lives. Obviously, we’re investing a lot, and it is showing up in the R&D spending that you’re looking at,” Cook had said. 

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