Since the release of Apple AI, the tech sector leader has been in full focus. Apple’s  (AAPL)  integration of generative artificial intelligence (AI) into its technology has been well received by consumers, leading to its management winning praise from experts.

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As the company’s reach has expanded, questions have risen about who Apple will partner with for its chip-building needs.

In recent years, Apple has purchased the chips necessary for powering its devices from different companies, such as Taiwan Semiconductor Manufacturing Company  (TSM) , the prominent contract chip manufacturer for most of Silicon Valley, and Micron Technology  (MU) .

Providing chips to a fast-growing industry leader is a lucrative market for these companies, but it may be closing.

Apple is focused on creating its own chips, and according to a recent report, it has chosen a partner for this venture who is likely to benefit significantly from this project.

Apple chooses partner to create critical AI chip

The booming AI chip market is changing quickly as companies provide updates on their progress and plans.

Earlier this month, Apple revealed that it buys chips for its search functions from Amazon  (AMZN)  subsidiary Amazon Web Services (AWS). But to build out its new AI-driven server chip, Apple is turning to a new partner.

Related: Apple unveils AI decision that is a major blow to Nvidia

Wednesday, The Information reported that Apple had confirmed plans to partner with Broadcom on its newest chip venture. This isn’t the first time the two companies have worked together.

In 2023, Apple announced that it had reached a multibillion-dollar agreement with Broadcom  (AVGO)  for the latter to produce 5G radio frequency components over a multiyear period.

Now, they seem to be embarking on a new initiative that could have much more significant implications for both stocks. According to The Information's sources, this new chip has been given the code name Baltra and is expected to be in mass production by 2026.

If it completes this project, Apple will have entered the server hardware production facet of the tech sector, putting it in an optimal position to continue expanding its share of the AI market.

It's no secret that most leading tech companies are racing to build their own AI chips.

Nvidia is currently the sector’s most dominant player due to the industry's reliance on its high-priced graphics processing units (GPUs). This means that the firms that can successfully produce less expensive chips capable of powering advanced AI models will have a significant growth-driving opportunity.