Apple is spending more on research and development as it tries to narrow the gap with competitors in artificial intelligence, according to a report from CNBC's MacKenzie Sigalos.

The news, while light on specific numbers, confirms a shift in priorities at a company that has historically let rivals take the first swing at new technologies before polishing a refined version. That playbook worked for smartphones, tablets, and smartwatches. Whether it works for AI is an open question.

The context behind the R&D increase

Apple's R&D budget has been climbing for years. The company spent roughly $30 billion on R&D in its most recent fiscal year, but that number alone doesn't tell you much about where the money is going. The CNBC report suggests that a meaningful portion of that increase is now earmarked for artificial intelligence, including large language models and on-device machine learning.

Apple has been quieter than Microsoft, Google, and Meta about its generative AI efforts. The company's annual developer conference, WWDC, typically includes a few AI-related announcements, but nothing on the scale of a ChatGPT competitor or a Bing integration. That silence has led investors and analysts to ask whether Apple is behind, and if so, how far.

What catching up means for Apple

Catching up in AI isn't just about building a better chatbot. Apple's entire ecosystem — from Siri to the Photos app to autocorrect — relies on machine learning. If Apple falls behind in foundational AI research, the quality of those features erodes compared to what competitors offer.

Apple has also made privacy a central selling point. Most of its AI processing happens on the device, not in the cloud, which limits the amount of data it can use to train models. Competitors like Google and OpenAI rely on vast server farms and user data to improve their models. Apple needs to find a way to compete without abandoning its privacy stance.

That could mean investing in smaller, more efficient models that run locally, or developing new hardware that accelerates on-device AI tasks. The company's custom silicon team, which designs the A-series and M-series chips, has already added neural engines. A bigger R&D budget could accelerate custom AI accelerator designs.

The competitive landscape

Microsoft has integrated OpenAI's models into its Office suite and search engine. Google has its own Gemini model powering everything from Android to Google Workspace. Meta has released open-source models. Amazon is building AI into Alexa and AWS.

Apple, by contrast, has shown only incremental updates. Siri remains limited. The company has not released a public generative AI product. It has published some AI research, but at a much lower volume than peers.

Apple's advantage has always been hardware and software integration. If it can embed AI deeply into iOS and macOS in a way that feels seamless, it may not need to win the chatbot race. But to do that, it needs the underlying models to be competitive.

What we don't know

The CNBC report does not provide a specific dollar amount for AI-related R&D, nor does it reveal a timeline for any new product. There are no mentions of which projects are getting the extra funding or whether Apple is hiring more AI researchers.

What is clear is that Apple sees AI as a gap that needs closing. The company has reportedly been meeting with AI talent and exploring acquisitions. It has also been testing its own large language model internally, code-named Ajax, though that detail comes from earlier reporting, not this CNBC piece.

Why it matters

Apple's R&D spending is closely watched because the company is one of the largest technology companies by revenue and market cap. A shift in spending priorities signals a change in strategy. If Apple is now investing heavily in AI, expect future iPhones, Macs, and services to come with more advanced AI features.

The risk is that Apple moves too slowly. The AI landscape is evolving rapidly. A year of development in 2024 could be worth two in 2026. If Apple waits until the technology stabilizes, it may find itself permanently behind.

What comes next

Investors will look for more details in Apple's next earnings call or at its upcoming developer conference. The company typically does not preview R&D spending allocation, so outside observers will have to infer priorities from product launches and job postings.

One area to watch is on-device AI. Apple has filed patents related to real-time language translation, image generation, and health monitoring, all of which would benefit from stronger AI models. If those features appear in the next iPhone software update, the R&D spending is already paying off.

Another signal will be hiring. Apple has been posting jobs for machine learning engineers and AI researchers across its offices. The pace and volume of those postings, combined with R&D spend data, will give a clearer picture of Apple's AI ambitions.

The bottom line

Apple is spending more on R&D, and AI is a primary reason. The company is playing catch-up, but it has the resources, the talent, and the hardware to close the gap. Whether it can do so without sacrificing its privacy principles or its product polish is the central question.

The CNBC report is a confirmation of what many have suspected: Apple knows it is behind, and it is writing checks to fix that. The results won't show up overnight, but the direction is clear.