iPhone maker Apple, Inc. (AAPL) is said to be working on designing and producing its own Artificial Intelligence-powered chips to run AI software on servers at its data centers, according to a Wall Street Journal report on Tuesday.

The company, until now known for its iPhones, iPads, and Macs, is reportedly working with Taiwan Semiconductor Manufacturing Co. or TSMC, on this project code named internally as “ACDC” (Apple Chips in Data Center).

Apple has successfully designed chips that are being used in the iPhone, iPads and Mac laptops over the years. Apple will now leverage its expertise in chip design, with TSMC reportedly helping in the design and producing them.

Project ACDC has been in the works for several years and it is uncertain when the new chip will be unveiled, if ever, the WSJ report said.

According to several reports, Foxconn is currently assembling Apple AI servers incorporating the M2 Ultra chip. It is also set to assemble AI servers powered by the M4 chip in late 2025.

By developing its own AI chips, Apple will have full control on its hardware for better security and design flexibility. Apple will also be able to boost its data centre performances and develop its own AI tools for cloud processing.

Apple CEO Tim Cook had recently dropped hints on a major AI-related announcement at the upcoming Worldwide Developers Conference (WWDC) in June.

Apple’s move comes on the back of major technology giants like Google, Amazon, and Meta announcing moves towards proprietary AI chips over the past few months.

Reports in mid-March stated that Apple is looking to strike a deal to obtain license to integrate Google’s Gemini AI tools into the iPhone OS. As for the timeframe, Apple could reportedly launch the AI integrated iOS 18 at the WWDC.

Since January this year, Apple has been involved in acquiring, hiring staff and updating hardware to design an iPhone with generative AI capabilities. The iPhone maker has reportedly been developing a large language model of its own, dubbed AppleGPT, which could compete with OpenAI’s ChatGPT.

The California-based company has acquired 21 AI startups since 2017. However, Apple’s own efforts to develop its own AI capabilities are progressing more slowly than expected. This is when Apple is trying to foray into developing AI-powered chips for servers.