This is a Financial Times article, regurgitated by Ars Technica. The article isn't by a tech journalist, it's by a business journalist, and their definition of "AI" is a lot looser than what you're thinking of.

I'm pretty sure they're talking about things that Apple is already doing not just on current hardware but even on hardware from a few years ago. For example the keyboard on iOS now uses pretty much the same technology as ChatGPT but scaled way way down to the point where "Tiny Language Model" would probably be more accurate. I wouldn't be surprised if the training data is as small as ten megabytes, compared to half a terabyte for ChatGPT.

The model will learn that you say "Fuck Yeah!" to one person and "That is interesting, thanks for sharing it with me." to someone else. Very cool technology - but it's not AI. The keyboard really will suggest swear words now by the way - if you've used them previously in a similar context to the current one. The old algorithmic keyboard had hardcoded "do not swear, ever" logic.

I've been playing with llama.cpp a bit for the last week and it's surprisingly workable on a recent laptop just using the CPU. It's not really hard to imagine Apple and others adding (more) AI accelerators on mobile.

Google is already doing this with Gemini Nano. https://store.google.com/intl/en/ideas/articles/pixel-feature-drop-december-2023

They're making their own silicone now. You can achieve a lot more efficiency when you're streamlined the whole way through.

Yes, like google is doing with their tensor chips in the pixels