Apple to ‘lean’ on Google for Siri revamp, Gemini set to be the brain behind AI assistant: Report

Apple is reportedly partnering with Google, leveraging its Gemini models to power a significant Siri overhaul and a new AI-driven web search feature, prioritizing financial considerations over performance preferences for Anthropic's Claude models. This strategic move, expected by March next year, involves Apple paying Google for a custom Gemini model for its private cloud, highlighting its reliance on external AI expertise. Concurrently, Apple plans broader AI strategy updates at next year's WWDC and is rumored to launch a foldable iPhone with an in-house C2 chip, potentially impacting Qualcomm's modem business.

Analysis

Apple (AAPL) is reportedly deepening its strategic reliance on Google (GOOGL) by leveraging Gemini models for a significant Siri overhaul and a new AI-powered web search feature, with a planned rollout by March next year. This decision, driven by financial considerations despite Anthropic's Claude models showing superior performance in a bake-off, indicates Apple's pragmatic approach to accelerating its AI capabilities. The existing search partnership, where Google pays Apple, is now expanding to Apple paying Google for a custom Gemini model hosted on its private cloud, signifying a critical shift in their relationship.

This move highlights Apple's need to catch up in the generative AI space, as Siri currently relies on ChatGPT for complex queries and faces increasing competition from AI startups. While the integration aims to provide expected AI features with an Apple UI, it underscores the company's external dependency for foundational AI models. Apple also plans broader AI strategy updates and new software versions (iOS 27, etc.) at next year's WWDC, indicating a comprehensive push into AI beyond just Siri.

Beyond AI, Apple is reportedly planning a foldable iPhone launch in September next year, featuring an in-house C2 chip and ditching Qualcomm (QCOM) modems. This development signals Apple's continued vertical integration efforts, aiming to reduce reliance on third-party suppliers for critical components. The shift away from Qualcomm represents a direct negative impact on the chipmaker's future revenue streams from Apple.

Key Decisions for Investors

• Investors should monitor Apple's AI integration success and financial implications of the Google partnership, as external reliance for core AI could impact long-term innovation and cost structures.
• Consider Google's strengthened position in the AI ecosystem and potential revenue growth from the expanded Apple partnership, which validates Gemini's enterprise appeal.
• Re-evaluate Qualcomm's long-term revenue outlook given Apple's reported move to internal modems for future iPhone models, signaling a significant customer loss.
• Assess the broader implications for AI foundational model providers, as this deal highlights the strategic value and competitive dynamics in securing top-tier AI capabilities for major tech platforms.