Please ensure Javascript is enabled for purposes of website accessibility

Apple Buys Another Artificial Intelligence Start-Up

By Evan Niu, CFA - Jan 17, 2020 at 8:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mac maker scooped up Xnor.ai for its low-power on-device AI processing tech.

It's been about a month since the last Apple (AAPL 2.45%) acquisition that investors have caught wind of (Spectral Edge, to bolster the company's computational photography). CEO Tim Cook confirmed last year that the tech titan tends to buy smaller companies every two to three weeks. Apple's latest acquisition is all about low-power edge-based artificial intelligence (AI).

Here's what investors need to know.

Sri Santhanam speaking on stage

Apple chip exec Sri Santhanam detailing the A13 Bionic's machine-learning capabilities in September. Image source: Apple.

Doing things locally

GeekWire reports that Apple has scooped up Xnor.ai, a Seattle-based start-up that specializes in on-device AI. Xnor.ai was previously spun out of Microsoft co-founder Paul Allen's AI incubator, the Allen Institute for AI (AI2), back in 2017. The company provides tools through a self-service platform that allow other developers to incorporate AI into their apps.

Apple paid an estimated $200 million for Xnor.ai, according to the report. Apple had previously acquired another Seattle-based AI start-up, Turi, back in 2016, also for around $200 million.

Xnor.ai's main differentiator is that its technology keeps all of the AI processing on the local device as opposed to relying on data centers in the cloud. Apple prefers to store as much data locally as possible in order to improve privacy protections.

Apple's A-series of chips include a neural engine that handles most of the machine learning and AI locally on iPhones, with the latest A13 Bionic chip boasting significant machine-learning performance improvements thanks to its eight-core neural engine. Sensitive biometric data used for Face ID or Touch ID is also stored locally in what Apple calls a Secure Enclave.

At the same time, low-power computing is critical to improving battery life. The start-up showed off an AI chip last year that used so little energy, it could run off solar power.

In recent years, Apple has been aggressively expanding in Seattle. The company said last summer that the Emerald City would "become a key engineering hub" that would employ 2,000 workers within the next few years. The Mac maker's office is right around the corner from Amazon's headquarters, and Apple is undoubtedly poaching talent from its rival.

Sorry, Wyze

Xnor.ai's tech was incorporated into Wyze's smart home security cameras last summer, enabling people detection on the affordable -- the entry-level Wyze Cam V2 costs just $20 -- devices that was all processed locally. Just a few months after that feature was added, Wyze said in November that the people detection capability would be removed in January 2020 after Xnor.ai terminated its contract.

Wyze is internally developing a comparable feature, although it may use the cloud instead of on-device processing. The timing of all of that probably isn't a coincidence. It's entirely possible that Apple bought Xnor.ai a couple months ago and investors are just now finding out.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.66 (2.45%) $3.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.