Apple’s strategic move away from Nvidia explained
In recent years, Apple has been actively revising its hardware strategy to reduce reliance on third-party manufacturers. One of the most significant moves in this direction has been the company’s intention to completely sever ties with Nvidia, a supplier of graphics processors and AI accelerators. As part of this strategy, Apple has ramped up its research and development efforts to create its own AI accelerators.
The relationship between Apple and Nvidia dates back to the early 2000s when Nvidia graphics cards were first introduced in Mac computers. However, even then, tensions between the companies were evident. Steve Jobs, Apple’s CEO at the time, openly expressed skepticism about Nvidia’s technology, alleging potential loans from the animation studio Pixar. According to The Information, Nvidia’s top manager denied the accusation, but Jobs disregarded the denial throughout the meeting. Nvidia, on its part, has also found working with Apple challenging, viewing the company as overly demanding for a customer that has not consistently ranked among its top ten clients. Over the years, disagreements persisted, with Apple voicing concerns about Nvidia’s energy-inefficient graphics cards, which produced significant heat -— particularly problematic for mobile solutions.
Despite Nvidia’s dominance in the AI accelerator market, holding a 70% to 95% share in recent years, Apple has chosen to forgo reliance on the company. It’s worth noting that until recently, Nvidia hardware was vital for various functions on Apple’s AI project platform. However, Apple has recognized the importance of developing in-house solutions to eliminate dependence on external partners. Interestingly, Apple hasn’t purchased Nvidia hardware directly but instead accessed it through Amazon and Microsoft cloud services. According to reports, this arrangement may not continue, as Apple has engaged Broadcom to work on developing its own AI accelerator.
Since the introduction of the M1 chip in November 2020, Apple’s first in-house processor for its Mac series, Apple has demonstrated its willingness to take bold steps. This decision has already led to a break with Intel, which has historically been Apple’s primary processor supplier. Since then, Apple has continued its push toward full autonomy, exploring the creation of its own AI accelerators to replace Nvidia’s technology.
Nvidia is one of the leading manufacturers of GPUs, and many Apple products — especially in the MAC and gaming segment — depend on Nvidia’s performance. If Apple decides to end its collaboration with Nvidia, this could impact the performance of its devices, potentially reducing consumer demand for its products.
However, if Apple successfully develops alternative solutions or relies on its technology, it could mitigate these risks. This shift, akin to automating trading on stock markets or leveraging a stock screener to identify undervalued opportunities, demands substantial time and resources.
Apple plans to launch new AI accelerators, codenamed Baltra, in 2026. These accelerators are expected to be produced at TSMC facilities using cutting-edge N3P process technology. Notably, this same process will debut in the iPhone 17 Pro, underscoring its significance for Apple’s future devices.
The potential break with Nvidia might also raise concerns among investors, potentially impacting Apple’s stock price if perceived as a sign of innovation or strategy issues. Apple stock is closely monitored by investors and regularly appears on stock screeners for its strong fundamentals and market influence. A poorly managed transition away from Nvidia could dampen investor sentiment, while a successful move could enhance confidence in Apple’s vision and drive its stock higher.
The end of Apple’s partnership with Nvidia could have far-reaching implications for the AI and graphics solutions markets. By striving for complete independence, Apple is making a decisive move toward self-sufficiency and innovation, setting the stage for changes that will reshape not only its business but also the broader tech industry.