diff --git a/python/llm/src/ipex_llm/transformers/lookup.py b/python/llm/src/ipex_llm/transformers/lookup.py
index 41d40f28..d5423848 100644
--- a/python/llm/src/ipex_llm/transformers/lookup.py
+++ b/python/llm/src/ipex_llm/transformers/lookup.py
@@ -29,6 +29,7 @@ from transformers import GenerationConfig, LogitsProcessorList, StoppingCriteria
 from ipex_llm.transformers.speculative import greedy, deepmind_sample, logits_to_probs,\
     _crop_past_key_values, _prepare_generate_args, _non_cpu_ipex_verify, clear_benchmarks
 from ipex_llm.utils.common import invalidInputError
+from ipex_llm.transformers.utils import get_xpu_device_type
 
 logger = logging.getLogger("ipex_llm.lookup")
 
@@ -119,10 +120,16 @@ class PromptLookupCandidateGenerator():
         self,
         num_output_tokens: int = 10,
         max_matching_ngram_size: int = None,
+        device: str = "arc",
     ):
         self.num_output_tokens = num_output_tokens
         self.max_matching_ngram_size = max_matching_ngram_size if max_matching_ngram_size else 2
 
+        if device == "mtl":
+            self.max_candidates = 3
+        else:
+            self.max_candidates = 9
+
         invalidInputError(self.max_matching_ngram_size > 0 and self.num_output_tokens > 0,
                           "Invalid max_matching_ngram_size or num_output_tokens")
 
@@ -183,25 +190,18 @@ class PromptLookupCandidateGenerator():
         # so returning None
         return candidate_input_ids, None
 
-    def update_candidate_strategy(self, input_ids: torch.LongTensor,
-                                  scores: torch.FloatTensor, num_matches: int):
+    def update_candidate_strategy(self, candidate_num: int, num_matches: int):
         """
         Updates the candidate generation strategy based on the outcomes.
 
         Args:
-            input_ids (`torch.LongTensor` of shape `(batch_size, sequence_length)`):
-                Indices of input sequence tokens in the vocabulary.
-                [What are input IDs?](../glossary#input-ids)
-            scores (`torch.FloatTensor` of shape `(batch_size, candidate_length,
-                config.vocab_size)`):
-                Prediction scores of a language modeling head. These can be logits for each
-                vocabulary when not using beam search or log softmax for each vocabulary
-                token when using beam search
             num_matches (`int`):
                 The number of matches between the candidate sequences and the model predictions.
         """
-        # Currently does nothing
-        return
+        if num_matches == self.num_output_tokens:
+            self.num_output_tokens = min(self.num_output_tokens + 1, self.max_candidates)
+        elif candidate_num > num_matches:
+            self.num_output_tokens = max(self.num_output_tokens - 1, 1)
 
 
 @torch.no_grad()
@@ -217,9 +217,12 @@ def lookup_generate(self,
         model_kwargs = _prepare_generate_args(self, inputs, generation_config,
                                               **sampling_kwargs)
 
+    device_name = get_xpu_device_type(input_ids)
+
     candidates_generator = PromptLookupCandidateGenerator(
         num_output_tokens=num_output_tokens,
-        max_matching_ngram_size=max_matching_ngram_size)
+        max_matching_ngram_size=max_matching_ngram_size,
+        device=device_name)
 
     step = 0
     step_verify = 0
@@ -291,6 +294,7 @@ def lookup_generate(self,
                                                         top_k=generation_config.top_k,
                                                         top_p=generation_config.top_p,
                                                         temperature=generation_config.temperature)
+                output_ids = output_ids.transpose(0, 1)
             else:
                 output_ids = greedy(logits)
 
@@ -303,13 +307,14 @@ def lookup_generate(self,
             # Drafts start from [1, k]
             # Verified output start from [0, k - 1]
             # including the one generated by the base model
-            max_matched = ((output_ids[:, :-1] != verify_input_ids[:, 1:]).cumsum(-1) == 0)
-            max_matched = max_matched.sum(-1).item() + 1
+            n_matches = ((output_ids[:, :-1] != verify_input_ids[:, 1:])
+                         .cumsum(-1) == 0).sum(-1).item()
+            max_matched = n_matches + 1
 
             max_of_max_matched = output_ids.size(1)
             # Accept number is max_matched, min is 1
             self.accept_num.append(max_matched)
-            self.n_matched += max_matched - 1
+            self.n_matched += n_matches
             self.n_drafted += candidate_length
 
             # Clean up target model KV cache
@@ -319,6 +324,9 @@ def lookup_generate(self,
                 past_key_values = _crop_past_key_values(self, past_key_values,
                                                         new_cache_size)
 
+            # Update the candidate generation strategy if needed
+            candidates_generator.update_candidate_strategy(candidate_length, n_matches)
+
             input_ids = torch.cat((input_ids, output_ids), dim=-1)
 
             step += output_ids.size(1)