iPhone Air is the big newcomer among Apple‘s latest lineup that went on sale Friday, but inside the slim phone’s raised plateau is another new piece of hardware that signals a renewed focus on artificial intelligence. 

Apple’s custom A19 Pro chip introduces a major architecture change, with neural accelerators added to each GPU core to increase compute power. Apple also debuted its first ever wireless chip for iPhone, the N1, and a second generation of its iPhone modem, the C1X. It’s a move analysts say gives Apple control of all the core chips in its phones.

“That’s where the magic is. When we have control, we are able to do things beyond what we can do by buying a merchant silicon part,” said Tim Millet, Apple vice president of platform architecture. He sat down with CNBC at Apple Park in September for the first U.S. interview about the new chips.

Until now, Broadcom was the main provider of wireless and bluetooth chips for iPhones, although Apple has made networking chips for the AirPods and Apple Watch for nearly a decade. Apple’s N1 is in the entire iPhone 17 lineup and the iPhone Air.

Arun Mathias, Apple vice president of wireless software technologies and ecosystems, gave CNBC an example of the N1’s improved Wi-Fi functionality. 

“One of the things people may not realize is that your Wi-Fi access points actually contribute to your device’s awareness of location, so you don’t need to use GPS, which actually costs more from a power perspective,” Mathias said. “By being able to do this more seamlessly in the background, not needing to wake up the application processor as much, we can do that significantly more efficiently.”

For iPhone modems, Qualcomm has been the sole provider since 2020. That changed in February when Apple unveiled the C1 in the iPhone 16e. It’s a plan first set in motion in 2019, with Apple’s purchase of Intel’s modem business for $1 billion. Qualcomm has long warned investors of the coming change. 

Qualcomm modems remain in the iPhone 17, 17 Pro and 17 Pro Max, but Apple’s C1X is in the iPhone Air. 

“It may not be as good as Qualcomm’s yet, in terms of just overall throughput and performance, but they can control it and they can make it run at lower power. So you’re going to get better battery life,” said Ben Bajarin, CEO of Creative Strategies, a technology research and consulting firm. He expects Apple to “completely phase out” Qualcomm in the “next couple of years.”

Apple’s Mathias said the C1X is “up to twice as fast” as the C1 and “uses 30% less energy” than the Qualcomm modem in the iPhone 16 Pro.

Neither Qualcomm or Broadcom saw much market impact following Apple’s announcement, and both companies will maintain licensing deals with Apple for certain core technologies.

Apple’s three new chips come amid increasing pressure from Wall Street about the company’s AI strategy.

“They probably won’t ever have their own Apple model like Google or OpenAI,” Bajarin said. “They’re still going to run those services on iPhone, right? They want the iPhone to be the best place for developers to run their AI.”

Apple has been making its own system on a chip, or SoC, since the A series launched with the iPhone 4 in 2010. The latest generation A19 Pro has a new chip architecture that prioritizes AI workloads, adding neural accelerators to the GPU cores.

“We are building the best on-device AI capability that anyone else has,” Millet told CNBC. “Right now we are focused on making sure that these phones that we’re shipping today, or shipping soon, will be capable of all the important on-device AI workloads that are coming.”

Privacy is a major reason Apple is prioritizing on-device AI, but Millet said there’s another reason, too. 

“It is efficient for us. It is responsive. We know that we are much more in control over the experience,” he said. 

One “built-in AI” feature Millet highlighted is the new front camera that uses AI to detect a new face and automatically switches to taking a horizontal photo. “It’s leveraging a full complement of almost all the capabilities in the A19 Pro,” Millet said.

Apple’s original AI hardware, its Neural Engine, was first unveiled back in 2017. It was barely mentioned at the launch. Instead, it’s all about adding compute power to the GPUs. 

“The integration of the neural processing is reaching MacBook Pro class performance inside an iPhone,” Millet said. “It’s a big, big step forward in ML compute. And so when you look inside the Neural Engine, for example, you have a lot of dense matrix math. We didn’t have that capability in our GPU. But now we do with A19 Pro.”

Bajarin told CNBC that Apple’s neural accelerators may work similarly to the tensor cores on Nvidia‘s AI chips, such as the H100.

“We’re integrating neural processing in a way that allows someone who’s writing a program to one of those small processors, extending the instruction set so they have a new class of computer that they have access to right there, and they can switch back and forth between 3D-rendering instructions and neural-processing instructions, all seamlessly inside the same microprogram,” Millet said.

Apple’s previous generation A19 SoC is in the base model iPhone 17, while the A19 Pro is in the iPhone Air, iPhone 17 and 17 Pro Max.

Following overheating issues in the iPhone 15, a new “vapor chamber” in the Pro models keeps the custom chips cool.

“It’s actually positioned in concert with where the system on a chip, the A19 Pro is positioned,” said Kaiann Drance, Apple’s vice president of worldwide iPhone product marketing. “We think about how that all goes together, including with that forged unibody aluminum design, which is incredibly thermally conductive so that we can effectively dissipate heat with the vapor chamber, with where it’s positioned with our chip. And it’s even laser welded into it, which creates a metallic bond which also helps dissipate heat.”

Apple still relies on others for smaller components, like Samsung for memory and Texas Instruments for analog chips. All bigger core chips, however, may be Apple-designed in every iPhone as soon as next year, according to Bajarin.

“We expect that there would be modems coming to Mac. We would expect there’s modems coming to iPad. There’s probably N variants of the networking chip coming to Mac,” Bajarin said. “I think over the course of the next few years, it will be on all of the portfolio.”

When CNBC asked Apple’s Millet if neural accelerators will be in the GPU cores of M5, the next anticipated SoC for Mac, he said, “We have a unified approach to architecture.”

The iPhone maker plans to manufacture at least some of its custom chips in the U.S., at facilities like Taiwan Semiconductor Manufacturing Company‘s new campus in Arizona, where CNBC got a tour of the first completed fab.

Apple’s A19 Pro is made at the leading edge of TSMC’s 3-nanometer node. While TSMC is working toward 3nm production in Arizona by 2028, it’s not there yet.

“If you need to be on the leading edge, it’s going to be Taiwan for the time being,” Bajarin said. 

In August, Trump announced a 100% tariff on chips from companies not making domestically. That same day, Apple increased its U.S. spending commitment to $600 billion over the next four years. CEO Tim Cook said part of that will go toward creating an “end-to-end silicon supply chain right here in America.”

“There’s really a question of what part of tariffs impact the silicon supply chain,” Bajarin said. “This is obviously why Apple and Tim Cook are on their mission and out there talking about investing in America.”

As part of that plan, Bajain said Apple could give struggling U.S. chipmaker Intel “serious consideration if 14A really does deliver on all of its promises.” Although, he added, it’s “going to be awhile” before Intel “becomes a viable option.”

For now, Apple is committed to making chips at TSMC Arizona.

“We are super excited about TSMC’s push into U.S. manufacturing. Obviously it will help us from a time zone perspective, and we also appreciate that the diversity of the supply is also really important,” Millet said.

When asked if he knows how much of Apple’s $600 billion U.S. spend will go toward custom silicon, Millet said, “I hope it’s a lot.”

Watch the video to see a behind-the-scenes look at Apple’s latest custom silicon.

Kif Leswing contributed to this report.