This is a Financial Times article, regurgitated by Ars Technica. The article isn't by a tech journalist, it's by a business journalist, and their definition of "AI" is a lot looser than what you're thinking of.
I'm pretty sure they're talking about things that Apple is already doing not just on current hardware but even on hardware from a few years ago. For example the keyboard on iOS now uses pretty much the same technology as ChatGPT but scaled way way down to the point where "Tiny Language Model" would probably be more accurate. I wouldn't be surprised if the training data is as small as ten megabytes, compared to half a terabyte for ChatGPT.
The model will learn that you say "Fuck Yeah!" to one person and "That is interesting, thanks for sharing it with me." to someone else. Very cool technology - but it's not AI. The keyboard really will suggest swear words now by the way - if you've used them previously in a similar context to the current one. The old algorithmic keyboard had hardcoded "do not swear, ever" logic.
I've been playing with llama.cpp a bit for the last week and it's surprisingly workable on a recent laptop just using the CPU. It's not really hard to imagine Apple and others adding (more) AI accelerators on mobile.
Oh yes and the CPUs on phones have being getting more powerful every year and there was nothing that could take advantage of their full potential now with a local AI will be great for privacy and response.
By making their own, you mean telling Taiwan Semiconductor Manufacturing Company “hey we are going to buy enough of these units that you have to give us the specs we chose at a better price than the competitors, and since we chose the specs off your manufacturing capacity sheets we will say “engineered in Cupertino TM” “
Btw I’m not shitting on Apple here. I love my m2 processor.