Apple turns to hardware veteran Ternus as CEO to succeed Cook in AI age

Highlights:

• Hardware insider Ternus credited with revitalising Mac sales, leading product innovations
• Ternus faces challenge of integrating AI into Apple products amid rising competition
• Tim Cook to become executive chairman after overseeing historic growth and global expansion

Apple on Monday named longtime hardware boss John Ternus as its next CEO, turning to another insider to steer the iPhone maker after Tim Cook as it navigates a world radically altered by artificial intelligence, a technology it has lagged on.

Cook, a supply-chain genius who boosted Apple's market value by $3.6 trillion in his 15 years at the helm, will stay on as executive chairman when Ternus takes over on September 1, Apple said in a statement.

Ternus, who joined Apple in 2001, has played a central role in reviving products such as the Mac, which has gained market share against PCs. Though he has kept a low public profile, he has been deeply involved in shaping Apple's biggest products such as iPads and AirPods.

The transition comes at a crucial time for Apple. After years on top of the most-valuable company scoreboard, Apple has lost its crown to AI chipmaker Nvidia, as investors have fretted over its lack of innovation in the technology that is changing how people work, create and get information.

Integrating AI into the iPhone - the most successful consumer product in history - may be Ternus' hardest challenge.

In January, Apple struck a deal with longtime rival in smartphones, Alphabet's Google, to use Google's Gemini in an effort to improve its Siri virtual assistant.

Despite introducing a form of AI to the public imagination in 2011 with Siri, Apple has not yet scored a hardware or software product hit centred on new AI technologies, while emerging rivals such as OpenAI's ChatGPT have attracted hundreds of millions of users.

In particular, Siri has not yet become an "agent" - the term that AI firms use for systems that carry out complex tasks like a human assistant.

"I expect his biggest challenge and efforts will be focused on getting a better AI story and offering together that relies more on Apple's own capabilities and less on third parties," said Bob O'Donnell, head of tech consulting firm TECHnalysis Research.

Apple gave Ternus airtime recently

At 50, Ternus is the same age Cook was when he took over CEO duties from Apple co-founder Steve Jobs.

Apple, which rarely allows its executives to speak publicly, has sought to elevate Ternus' profile in recent years, having him speak with the press about Apple's products.

He showed off the iPhone Air in September, the biggest revamp of the firm's top-selling product in nearly a decade.

Ternus will also have to fend off rivals such as Meta Platforms, whose augmented-reality glasses have become a surprise hit with just a fraction of the capabilities - and price tag - of Apple's $3,499-plus Vision Pro headset. Nvidia, too, has announced its own personal computer and is working on chips that can power laptops.

"The promotion of Mr Ternus indicates the company will focus on new hardware devices such as folding phones, glasses, VR devices and AI pins," said Gil Luria, managing director of D.A. Davidson & Co.

Cook oversaw historic growth

Apple shares declined about 0.5% after regular trading hours when the news was announced, after being up about 1% during regular trading. The stock has soared 20-fold since Cook took over as CEO in August 2011.

Cook, 65, was recruited by Jobs from Compaq at a time when that firm was riding high on the 1990s PC boom and Jobs was working to rescue Apple from the brink of insolvency.

He made his early reputation at Apple by building out its sprawling supply chain with contract manufacturers in China, a model that became the envy of Corporate America because it kept expensive factory operations and product inventories largely off Apple's books while maximising profits.

Apple's decades of investments in China helped fuel that nation's rise as the world's workshop, a phenomenon that even Cook has found hard to shift away from.

Despite opening assembly operations in India and Vietnam, Apple still sources many key parts and subsystems from China, and Cook has not yet been able to present a "Made in US" iPhone to US President Donald Trump, despite hundreds of billions of dollars of investment in Apple's US supply chain partners.

Cook, who presented a custom golden plaque to Trump last year, will continue to engage with policymakers, the company said.

Over his tenure, Cook became a celebrity CEO in his own right. He was the first Fortune 500 CEO to come out as gay in 2014 and took public stances on issues such as workplace diversity and corporate sustainability.

Separately, Apple said that Johny Srouji, who has overseen Apple's custom chip and sensor designs, has been named chief hardware officer. Srouji will continue to oversee that group, along with the hardware engineering group that Ternus once led, which will now be overseen by Tom Merieb.