The upcoming iPhone 16 series from Apple Inc. (NASDAQ:AAPL) will be powered by ARM Holdings (NASDAQ:ARM) latest chip technology, designed to improve AI capabilities.

What Happened: The new iPhone will be launched on Monday during the "Glowtime" event, featuring a next-generation chip based on Arm's newest design architecture, reported Financial Times.

This move is part of Apple's ongoing efforts to integrate advanced AI features into its smartphones.

The A18 chip, which will be unveiled at Apple's event, is based on the V9 chip design from Arm, a SoftBank-owned company, the report noted, citing sources familiar with the matter.

Arm's CEO, Rene Haas, has previously stated that the V9 chip generates double the royalties of its predecessor, the V8.

Arm's chip architecture provides the foundational instructions for the chip, with the company earning revenue through both licensing and royalties.

Apple has already incorporated Arm's V9 architecture into its latest M4 MacBook chips, which were announced in May.

The company has also been focusing on transforming itself into an AI-centric company, introducing several features under the umbrella of "Apple Intelligence."

However, the increased computational demands of running AI models on a compact device necessitate advancements in chip technology.

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Why It Matters: In July, Arm reported its first-quarter financial results earnings of 40 cents per share, surpassing the analyst consensus estimate of 34 cents by 17.65%.

Quarterly sales reached $939 million, exceeding the consensus estimate of $902.691 million by 4.02%, driven by record license revenue and significant growth in royalty revenue.

Apple's focus on AI has also been evident in its recent activities. In August, Apple's CEO Tim Cook highlighted the company's 'breakthrough' AI platform during the third-quarter earnings call, indicating a strategic shift towards AI.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.