Apple and Google Forge Major AI Alliance, Boosting Taiwan's Supply Chain Including Hon Hai and Quanta

Apple has announced an integration with Google's Gemini model into the next-generation Siri, significantly enhancing Apple Foundation Models and strengthening AI capabilities across future iPhones. Industry observers expect the partnership between the two tech giants to drive additional demand for Google's AI infrastructure, benefiting contract manufacturers such as Hon Hai Precision Industry (Foxconn), Quanta Computer, and Inventec. The collaboration is also expected to stimulate sales of Apple hardware, including iPhones and MacBooks, lifting Taiwan's broader supply chain, notably TSMC, Hon Hai, and Largan Precision.

Hon Hai has entered Google's TPU supply chain through the provision of compute trays. According to market analysts, Google currently plans a one-to-one shipment ratio, with one compute tray supplied by Hon Hai for each TPU rack delivered. Google's TPUs have already been adopted by Meta, and with Apple's additional computing demand, Hon Hai’s future order momentum from Google is expected to strengthen.

Quanta, which has worked with Google in the server segment for many years, has recently expanded its role by supplying L6 to L11 GB200 and GB300 AI servers into Google's supply chain. Order visibility extends through the end of this year, and analysts remain optimistic about Quanta's prospects as Apple deepens cooperation with Google.

On Wall Street, the partnership is widely viewed as a crucial endorsement of Google's AI model development. The news propelled Alphabet’s market capitalisation past US$4 trillion on June 12, making it the fourth U.S. technology company, after Nvidia, Microsoft, and Apple, to cross the threshold.

Google suggested that, after careful evaluation, Apple selected Google’s AI technology as the most effective foundation for Apple’s core models, with Gemini set to power Apple’s forthcoming “Apple Intelligence” features.

Both parties have not yet disclosed any financial terms. According to a Bloomberg report from last November, Apple plans to pay Google around US$1 billion annually for Gemini’s support system of an AI-enhanced Siri. Previously, Gemini has already powered many of Samsung's Galaxy AI features, and the Siri partnership opens a vast new market for Google, granting direct access to more than 2 billion active Apple devices worldwide.

Both companies emphasised that the partnership is non-exclusive. Apple also said the deal does not affect its integration of ChatGPT, a stance likely to fuel questions over Apple's existing relationship with OpenAI.

By the end of 2024, Apple had already integrated ChatGPT into its devices, allowing Siri, under user consent, to route complex queries to ChatGPT for processing.

Parth Talsania, the CEO & Head of Research of Equisights, said Apple's choice of Gemini signals that OpenAI's role within Apple's ecosystem is shifting toward a more auxiliary position, with ChatGPT primarily handling user-initiated complex queries rather than serving as the default intelligence core.

To close the early lead established by OpenAI, Google has sharply increased investment in advanced models as well as image and video generation technologies. Google's capital expenditure for 2025 is projected to reach US$93 billion, and the company has indicated that spending could rise significantly again in 2026, underscoring its aggressive push into AI infrastructure.