They’re using a transformer-based generative AI in the iOS 17 keyboard. It’s cross-trained on your text so it predicts what you’re going to write, and unlike MS’s it’s on-device rather than cloud-based.
There’s also loads and loads of AI in the camera and photos apps, in Apple Music (mostly server-side), in iCloud mail’s spam filtering, and so on, and has been for years. The speech recognition and generation capabilities are also heavily dependent on AI
What apple aren’t doing much (if anything) on is generalised chat bots: they’re a neat gimmick but they’re not actually a useful or entertaining product yet, and apple has almost always focused on producing a product.
Something I assume they’re working on, but are lacking in, is natural text to command processing. In some ways Siri’s text-to-command processing isn’t as convincing as old text adventures, though those were a lot more rigidly coded, while the underlying commands are a horribly irregular mess and not well-integrated with Automator actions or applescript even on the Mac.