Apple is exploring the use of generative AI (genAI) to improve its custom chip development, according to Johny Srouji, senior VP of hardware technologies.

In a speech last month in Belgium, Srouji pointed out the role of advanced tools like electronic design automation (EDA) software in chip design.

He noted that genAI could increase productivity by allowing more design work to be completed in less time.

Srouji also referenced Apple’s transition to Apple Silicon in 2020 as a “huge bet,” saying the company committed to the shift without backup plans.

Apple’s custom chip efforts began with the A4 chip in 2010 and now power products like Mac computers and the Vision Pro headset.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ The EDA duopoly powers semiconductor innovation behind the scenes

While Apple receives acclaim for its custom chips, the less visible electronic design automation (EDA) software that enables their creation deserves attention.

Cadence and Synopsys dominate this critical market with a combined 74% market share and near-perfect client retention rates of approximately 100%, creating a remarkably stable duopoly 1.

These companies provide the essential software tools that transformed chip design from manual processes to sophisticated automated workflows, enabling the creation of increasingly complex processors 2.

The EDA market, valued at $11.5 billion in 2020, is projected to grow to $18.5 billion by 2026 at an 8% annual growth rate, reflecting the increasing importance of these tools as chip complexity grows 3.

Both companies maintain subscription-based revenue models generating 80-85% recurring revenue, creating extremely predictable business performance despite the volatile nature of the broader semiconductor industry 1.

Apple’s interest in applying generative AI to chip design targets this exact workflow, potentially accelerating the design process while maintaining or improving quality in an industry where software tools are already critical productivity multipliers.

2️⃣ Apple’s “no backup plan” strategy represents a distinctive risk appetite

Srouji’s revelation that Apple had “no backup plan” when transitioning Macs to Apple Silicon demonstrates an unusual willingness to make all-or-nothing bets that few other technology companies would attempt.

The 2020 Mac transition represented one of Apple’s biggest risks in recent history, as failure would have damaged both their reputation and a product line dating back to 1984 4.

Apple faced significant engineering challenges, including whether their mobile-derived architecture could scale to match high-end Intel processors for professional workloads while maintaining software compatibility 4.

This approach contrasts with most technology transitions where companies typically maintain parallel systems or phased rollouts to minimize disruption and provide fallback options if problems emerge.

The gamble ultimately paid off with the M1 chip delivering substantial performance improvements and better battery life compared to previous Intel models, strengthening Apple’s market position 5.

This risk-taking strategy aligns with Apple’s broader history of bold moves like eliminating phone jacks and disc drives before competitors, demonstrating how their vertical integration provides confidence to make decisive platform changes.

3️⃣ Increasing chip complexity drives demand for advanced design tools

The semiconductor industry faces exponentially increasing design complexity, creating strong demand for tools that can accelerate and simplify the chip development process.

Modern chip development costs have risen dramatically, with complex designs requiring hundreds of engineers and substantial investments in specialized software tools 1.

EDA companies like Cadence and Synopsys are projected to grow at 15-20% compound annual growth rates over the next five years, significantly outpacing many other technology sectors 6.

Apple’s interest in generative AI for chip design aligns with industry trends, as these tools could potentially automate repetitive aspects of chip design while allowing engineers to focus on innovation and performance optimization.

The critical nature of EDA software explains why Apple, despite its preference for vertical integration, continues to rely on external vendors for these specialized tools rather than developing them in-house.

Generative AI applications in chip design could represent the next evolution in semiconductor development workflows, potentially reducing design cycles and accelerating the pace of hardware innovation.

Recent Apple developments

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