Tony Fadell Warns Apple Has ‘Zero’ Data Center Muscle for AI Arms Race

In a scathing critique, former senior Apple executive Tony Fadell warned the iPhone maker is massively ill-equipped to take on the AI superpowers when it comes to the data center infrastructure required to power advanced AI models and services at scale.

“Apple has ZERO data center capabilities relative to the leaders & why it needs to partner with Google/OpenAI/etc,” Fadell wrote in a widely shared X post.

The blunt assessment from Fadell – who led Apple’s influential iPod and original iPhone hardware teams – comes amid heightened expectations for the tech behemoth to reveal its generative AI game plan at its annual developer conference next month. But the erstwhile insider contends any such plans are likely doomed by Apple’s failure to invest sufficiently in the hyperscale data centers and computing power that underpin AI breakthroughs.

Taking a Swipe at Apple’s Capital Return Strategy

In his broadside, Fadell argued Apple’s $90 billion stock buyback program runs counter to the “capital investments in AI, data centers, etc.” being made by rivals to fortify their positions. He even invoked the philosophy of late founder Steve Jobs “loathed stock buybacks” because they did little to feed the company’s all-important innovation pipeline.

While admitting Apple has experience operating data centers to serve software and services at scale, Fadell dismissed that institutional knowledge as inadequate for modern AI workloads. Simply put, he sees Apple’s lack of raw data center capacity as a fatal flaw that may require it to partner with others already ahead of the game.

Apple has remained largely silent on its AI strategy amid the frenzy over AI, while deflecting criticism that it’s fallen behind. If Fadell’s assessment proves accurate, playing catch-up could prove exceedingly difficult – and costly – versus competitors that capitalized on building hyperscale AI-first infrastructure years ago.