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Amazon CEO, Andy Jassy speaking with CNBC’s Jim Cramer on Mad Money in Seattle, WA. on Dec. 6th, 2023.

CNBC

Apple is currently using Amazon Web Services’ custom artificial intelligence chips for services like search and will evaluate if the company’s latest AI chip can be used to pretrain its models like Apple Intelligence.

Apple revealed its usage of Amazon’s proprietary chips at the annual AWS Reinvent conference on Tuesday. Benoit Dupin, Apple’s senior director of machine learning and AI, took the stage to discuss how Apple uses the cloud service. It’s a rare example of the company officially allowing a supplier to tout them as a customer.

“We have a strong relationship, and the infrastructure is both reliable and able to serve our customers worldwide,” Apple’s Dupin said.

Apple’s appearance at Amazon’s conference and its embrace of the company’s chips is a strong endorsement of the cloud service as it vies with Microsoft Azure and Google Cloud for AI spending. Apple uses those cloud services, too.

Benoit said Apple had used AWS for more than a decade for services including Siri, Apple Maps and Apple Music. Apple has used Amazon’s Inferentia and Graviton chips to serve search services, for example, and Benoit said Amazon’s chips had led to a 40% efficiency gain.

But Benoit also suggested that Apple would use Amazon’s Trainium2 chip to pretrain its proprietary models. It’s a sign that Amazon’s chips aren’t just a cost-effective way to inference AI models compared with x86 central processors made by Intel and AMD, but can also be used to develop new AI. Amazon announced on Tuesday that its Trainium2 chip was generally available to rent.

“In early stages of evaluating Trainium2 we expect early numbers up to 50% improvement in efficiency with pretraining,” Dupin said.

AWS CEO Matt Garman said in an interview with CNBC on Tuesday that Apple had been an early adopter and beta-tester for the company’s Trainium chips.

Apple “came to us, and said to us, ‘how can you help us with our Generative AI capabilities, we need infrastructure in order to go build,’ and they had this vision for building Apple Intelligence,” AWS CEO Matt Carman told CNBC’s Kate Rooney.

Earlier this year, Apple said in a research paper that it had used Google Cloud’s TPU chips to train its iPhone AI service, which it calls Apple Intelligence.

The majority of AI training is done on pricey Nvidia graphics processors. Cloud providers and startups are racing to develop alternatives to lower costs and are exploring different approaches that could lead to more efficient processing. Apple’s usage of custom chips could signal to other companies that non-Nvidia training approaches can work.

AWS is expected to announce new details on Tuesday about offering Nvidia Blackwell-based AI servers for rent, too.

Apple released its first major generative AI product this fall. Apple Intelligence is a series of services that can summarize notifications, rewrite emails and generate new emojis. Later this month, it will integrate with OpenAI’s ChatGPT, the company says, and next year, Siri will get new abilities to control apps and speak naturally.

Unlike leading chatbots like OpenAI’s ChatGPT, Apple’s approach to AI isn’t based on large clusters of Nvidia-based servers in the cloud. Instead, Apple uses an iPhone, iPad or Mac chip to do as much of the processing as possible, and then sends complicated queries to Apple-operated servers using its own M-series chips.

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Tech stocks sink after Trump tariff rollout — Apple heads for worst drop in 5 years

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Tech stocks sink after Trump tariff rollout — Apple heads for worst drop in 5 years

CEO of Meta and Facebook Mark Zuckerberg, Lauren Sanchez, Amazon founder Jeff Bezos, Google CEO Sundar Pichai, and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. president in the U.S. Capitol Rotunda in Washington, Jan. 20, 2025.

Saul Loeb | Via Reuters

Technology stocks plummeted Thursday after President Donald Trump’s new tariff policies sparked widespread market panic.

Apple led the declines among the so-called “Magnificent Seven” group, dropping nearly 9%. The iPhone maker makes its devices in China and other Asian countries. The stock is on pace for its steepest drop since 2020.

Other megacaps also felt the pressure. Meta Platforms and Amazon fell more than 7% each, while Nvidia and Tesla slumped more than 5%. Nvidia builds its new chips in Taiwan and relies on Mexico for assembling its artificial intelligence systems. Microsoft and Alphabet both fell about 2%.

Semiconductor stocks also felt the pain, with Marvell Technology, Arm Holdings and Micron Technology falling more than 8% each. Broadcom and Lam Research dropped 6%, while Advanced Micro Devices declined more than 4% Software stocks ServiceNow and Fortinet fell more than 5% each.

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The drop in technology stocks came amid a broader market selloff spurred by fears of a global trade war after Trump unveiled a blanket 10% tariff on all imported goods and a range of higher duties targeting specific countries after the bell Wednesday. He said the new tariffs would be a “declaration of economic independence” for the U.S.

Companies and countries worldwide have already begun responding to the wide-sweeping policy, which included a 34% tariff on China stacked on a previous 20% tax, a 46% duty on Vietnam and a 20% levy on imports from the European Union.

China’s Ministry of Commerce urged the U.S. to “immediately cancel” the unilateral tariff measures and said it would take “resolute counter-measures.”

The tariffs come on the heels of a rough quarter for the tech-heavy Nasdaq and the worst period for the index since 2022. Stocks across the board have come under pressure over concerns of a weakening U.S. economy. The Nasdaq Composite dropped nearly 5% on Thursday, bringing its year-to-date loss to 13%.

Trump applauded some megacap technology companies for investing money into the U.S. during his speech, calling attention to Apple’s plan to spend $500 billion over the next four years.

Evercore ISI's Amit Daryanani on keeping Apple's outperform rating despite tariffs

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Plaid raises funding at $6 billion valuation, enabling some employees to cash out

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Plaid raises funding at  billion valuation, enabling some employees to cash out

Zach Perret, CEO and co-founder of Plaid, speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Jan. 31, 2020.

George Frey | Bloomberg via Getty Images

Plaid on Thursday announced a new funding round that values the fintech startup at $6 billion, down from $13.4 billion in 2021. The new funding will give some employees a way to cash out.

The $575 million round was led by a batch of new investors including Franklin Templeton, Fidelity and BlackRock. Existing backers NEA and Ribbit Capital also participated, Plaid said.

Plaid CEO Zach Perret said the startup saw a “substantial” growth year with record revenue and positive operating margins, though he did not provide specifics. The downsized valuation is a reflection of market conditions, he said.

“The reality is our business is much stronger and revenue has grown quite substantially,” Perret told CNBC. “The profitability of business has gotten quite a lot better, and yet we are impacted by market multiples, as many companies are.”

Plaid is “not ready” for an IPO quite yet, but this round will be the last private fundraise until the company lists on public markets, he said.

“An IPO is absolutely on our path for the coming years. We haven’t assigned a specific timeline to it,” Perret said. “We still have a lot of internal work to do. We’re not ready, which is why we didn’t consider it right now.”

Rise of secondary rounds

Plaid’s new funding allows employees to cash out of restricted stock units that expire at the end of the year. The startup will also use a portion of the proceeds to enable an employee tender offer.

“That’s the motivation for the round,” Perret said. “We think it’s important to give our employees options to sell and the ability to have liquidity, especially given that Plaid has been private for so long.”

Plaid is the latest in a string of late-stage, private deals designed to enable employees to cash out in private markets. Ramp, DataBricks, OpenAI and Stripe have all announced secondary financings that were designed to let some employees get liquidity. Few of those companies seem eager to wade into public markets. Recent volatility around stocks and lackluster performance of recent IPOs, including CoreWeave’s last week, has kept some companies on the sidelines.

“Volatility is definitely going to be one of the key factors,” Perret said, adding that it was too early to assess IPO market conditions for Plaid.

The startup has been on a roller coaster in private markets since it was founded a decade ago. Plaid was set to be bought by Visa for $5 billion in 2020 in a deal that was eventually called off amid regulatory scrutiny. The following year, it raised money at a $13.4 billion valuation. That also marked the peak for growth and technology valuations before the Federal Reserve began raising interest rates.

Plaid provides the plumbing to connect consumer bank accounts to popular finance apps. Its APIs let consumers link their bank accounts to services like Venmo, Robinhood and Coinbase. Since then, it’s expanded into direct bill pay, cyber security and data analytics. It also partners with major banks.

Cybersecurity is one of Plaid’s largest growth areas, Perret said. He pointed to financial fraud growing at 20% to 25% per year as a result of the boom in artificial intelligence.

“We’ve been leaning in to try to build tools to combat deep fakes and a lot of AI-driven financial fraud,” he said. “Unfortunately, this is a large market opportunity. It’s something that we’d actually like to be smaller. But it’s been an area of growth.”

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Here’s where Apple makes its products — and how Trump’s tariffs could have an impact

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Here's where Apple makes its products — and how Trump's tariffs could have an impact

Apple’s iPhone 16 at an Apple Store on Regent Street in London on Sept. 20, 2024.

Rasid Necati Aslim | Anadolu | Getty Images

Apple has made moves to diversify its supply chain beyond China to places like India and Vietnam, but tariffs announced by the White House are set to hit those countries too.

U.S. President Donald Trump laid out “reciprocal tariff” rates on more than 180 countries on Wednesday.

China will face a 34% tariff, but with the existing 20% rate, that brings the true tariff rate on Beijing under this Trump term to 54%, CNBC reported. India faces a 26% tariff, while Vietnam’s rate is 46%.

Apple was not immediately available for comment when contacted by CNBC.

Here’s a breakdown on Apple’s supply chain footprint that could be affected by tariffs.

China

The majority of Apple’s iPhones are still assembled in China by partner Foxconn.

China accounts for around 80% of Apple’s production capacity, according to estimates from Evercore ISI in a note last month.

Around 90% of iPhones are assembled in China, Evercore ISI said.

While the number of manufacturing sites in China dropped between Apple’s 2017 and 2020 fiscal year, it has since rebounded, Bernstein said in a note last month. Chinese suppliers account for around 40% of Apple’s total, Bernstein said.

Evercore ISI estimates that 55% of Apple’s Mac products and 80% of iPads are assembled in China.

India

Apple is targeting around 25% of all iPhones globally to be made in India, a government minister said in 2023.

India could reach about 15%-20% of overall iPhone production by the end of 2025, Bernstein analysts estimate. Evercore ISI said around 10% to 15% of iPhones are currently assembled in India.

Vietnam

Vietnam has emerged in the past few years as a popular manufacturing hub for consumer electronics. Apple has increased its production in Vietnam.

Around 20% of iPad production and 90% of Apple’s wearable product assembly like the Apple Watch takes place in Vietnam, according to Evercore ISI.

Other key countries

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