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.