Google and Apple recently issued a joint statement indicating that they have reached a multi-year cooperation agreement. Ming-Chi Kuo, an analyst at Tianfeng International Securities known as the &#34;strongest Apple analyst,&#34; published an analysis stating that Apple faces two short-term challenges in developing its own AI, which compels it to collaborate with Google. These challenges are the need for a successful AI demonstration at this year's WWDC and the rising quality standards for AI services as cloud AI develops. Even if Apple fulfills its past commitments regarding Apple Intelligence and Siri, &#34;it seems insufficient now,&#34; thus requiring a stronger device AI model.
<h2>AI Becoming Core is Inevitable</h2>
Kuo pointed out that while he does not expect device AI to boost hardware shipments in the short term, this collaboration can alleviate Apple's short-term pressures from various sources. However, it is inevitable that AI will become the core of hardware, operating systems, and user experience, so Apple will still face the challenge of enhancing its control over core AI technologies in the long term.
He also noted that Tesla's FSD is a good example of AI becoming central to devices and user experience. If Tesla's FSD algorithms came from other vendors, Tesla's competitive advantage and PE valuation would certainly be lower than they are now.
Additionally, Apple's self-developed AI server chips are expected to enter mass production in the second half of this year, and its own data centers are projected to begin construction and operation in 2027, which may indicate that Apple's demand for device AI is expected to see significant growth starting in 2027.
Related article: Google and Apple collaborate on the Gemini model to help build Apple Intelligence

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Ming-Chi Kuo analyzed that Apple faces two major short-term challenges in developing AI, prompting its collaboration with Google. The challenges include the need for a successful AI demonstration at WWDC and the increasing user expectations for the quality of AI services. Although integrating AI into devices is unlikely to boost hardware shipments in the short term, this collaboration can alleviate pressure on Apple. In the long term, Apple needs to enhance its control over core AI technologies, with self-developed AI server chips expected to enter mass production in the second half of the year, and the data center is projected to be completed by 2027, at which point the demand for device AI will significantly increase

- Google and Apple recently announced a multi-year collaboration aimed at improving AI capabilities amid challenges faced by Apple in its AI development.  
- Analyst Ming-Chi Kuo noted that Apple's need to partner with Google is driven by the failure of AI demonstrations and rising user quality standards for AI services, suggesting that even fulfilling past commitments may no longer be sufficient.  
- While the collaboration may alleviate immediate pressures, Kuo emphasized that Apple must enhance its control over core AI technologies in the long term, with significant growth expected in Apple's AI demands by 2027.

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Ming-Chi Kuo stated that Apple faces two major challenges in developing AI, forcing it to collaborate with Google