In a move that could lower its dependence on external chip manufacturers like NVIDIA Corporation ( NVDA ) , Apple Inc ( AAPL ) is reportedly developing its own chips.

According to a report from the Wall Street Journal, these chips are designed to run artificial intelligence (AI) software within data centers.

What Happened: Apple ( AAPL ) has been working on a project, termed ACDC (Apple Chips in Data Center), for several years, WSJ reports. The tech giant has been partnering with Taiwan Semiconductor Manufacturing Co. for the chip’s design and production, but the success of these efforts is still uncertain.

The Wall Street Journal suggests that Apple’s server chip will likely concentrate on AI inference rather than training AI models, an area that experts believe NVIDIA ( NVDA ) will continue to dominate. AI inference is the process whereas trained machine learning models draw conclusions from new data.

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Apple’s initiative is similar to other tech giants like Google’s parent company Alphabet Inc ( GOOG ) , which is also developing its own AI inference server chips to reduce reliance on chip designers. However, experts note that Apple ( AAPL ) is still trailing rivals such as Microsoft in the AI technology race.

Apple ( AAPL ) CEO Tim Cook stated in February that the company was “investing significantly” in AI technology and would make an AI-related announcement later this year. The announcement is anticipated at the Worldwide Developers Conference in June.

Why It Matters: Apple’s move to develop in-house AI chips is part of a broader trend among tech companies to reduce their dependence on external chip manufacturers. According to a report by The Verge, companies like Google ( GOOG ), Meta, Microsoft, and OpenAI are also working on custom server hardware to power AI models.

This shift towards in-house development could potentially disrupt the traditional chip manufacturing industry, particularly affecting companies like NVIDIA ( NVDA ) that have a significant market share.

But, because Apple's ( AAPL ) new chips are likely to focus on areas outside of NVIDIA's ( NVDA ) expertise, it's probable that there will be space for both of the tech giants in the AI race.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.