“Late Tuesday, in response to questions from Forbes.com, an Apple spokesman said Apple has agreed to buy a boutique microprocessor design company called PA Semi. The company, which is known for its design of sophisticated, low-power chips, could spell a new future for Apple’s flagship iPhone, and possibly iPod products as well,” Erika Brown, Elizabeth Corcoran and Brian Caulfield report for Forbes.
“The 150-person chip company, P.A. Semi, was founded in 2003 by Dan Dobberpuhl, who was a lead designer for the well-regarded Alpha and StrongARM microprocessors developed by Digital Equipment in the 1990s,” Brown, Corcoran and Caulfield report.
“Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans,” said Apple spokesman Steve Dowling. He declined to comment on the value of the deal, which a person familiar with the deal suggested was done for $278 million in cash. Apple is due to announce its quarterly earnings Wednesday,” Brown, Corcoran and Caulfield report.
“The decision to center the iPhone design around a chip that Apple could own marks a significant strategic choice by Apple Chief Executive Steve Jobs, and is aimed at ensuring Apple can continue to differentiate its flagship phone as a raft of competitors flood the market. According to a source affiliated with the chip company, Jobs and Senior Vice President Tony Fadell led the tiny group of executives who spearheaded the acquisition, which included negotiations that took place in Jobs’ home,” Brown, Corcoran and Caulfield report.
“Although no current Apple products use P.A. Semi chips, Apple executives kept a close eye on the work of the start-up. Talks of acquiring P.A. Semi began only in the past few weeks. Employees have been notified of the deal,” Brown, Corcoran and Caulfield report.
“It will likely take at least a year before products incorporating P.A. Semi designs are ready… insiders suggest that Jobs plans to use future P.A. Semi chips exclusively within Apple products,” Brown, Corcoran and Caulfield report. “At that point, executives believe the company will have created a unique asset–a powerful microprocessor that sips power lightly and so can support just about any imaginable applications Apple’s software gurus can imagine.”
Much more in the full article here.
[Thanks to MacDailyNews Reader “MacVicta” for the heads up.]
A rare, sizable Apple acquisition is always big news and, if Forbes’ speculation bears out, has the potential to keep the current and future fake iPhone makers (Nokia, Samsung, LG, HTC, etc.) trailing far behind Apple. We’ll have to wait for more details to arise before we can better size up Apple’s intent. Apple has some history with PA Semi, see this related article: Apple shunned chip start-up PA Semi for Intel – May 19, 2006
ohhhhh kewl. Armani processors.
wow I am getting wet!
May make this iPhone look like a TRS80 someday.
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Posted from my DAY 1 iPhone
A very impressive strategic move… It’s a shame that electronic devices are so easily cloned / stolen and or borrowed heavily from. I would buy more Apple stock if I had the dough-ray-me.
-Pi
@buill
Too much information.
I am not so sure I like where this is going. Isn’t this the same road Apple has been down before where it tries to be different and use a different processor than the rest of the industry? Did we not see the mac go through this and finally just adopted the x86 from Intel? And what are they going to do by buying the company, compete with Intel? No matter what this firm comes up with, I am confident Intel, with its massive R&D;, can build something just as good. Will we see Apple some day running all phones and iPods on its own chip, everyone else, including the majority of third party developers, running Intel? So which one gets all the third party support?
So others try to copy Apple products. So What? It just means Apple has to innovate and stay ahead. I just don’t understand why Apple would go down this road. Let Intel build the processors, concentrate on building the best products.
Maybe they bought it for Intel. Intel will probably have to build them if they need them in quantity. Are gaming consoles using this version of the power pc chip? Slow the growth on that side? Apple looked silly promising 3GHz, what are the people using these chips promising?
THAT SOUNDS GOOD!
nevertheless buying gracenote and audible also would have been a good idea. these are called strategic assets. now they are in the hands of competitors. (sony and amazon)
Seems like Apple pissing away money trying to prove the whole PowerPC fiasco wasn’t just one terrible mistake. If a companies the size of IBM and Motorola couldn’t keep the Power PC moving forward, what makes Apple think they have a hope on their own?
Theres’278 million Apple’s not going to see any return on.
This may have been a move to give Apple better negotiations with Intel. They may have bought the company as a threat to move away from Intel.
Or maybe they’re developing a powerful secondary processor. Maybe a full scale graphics chip.
Nice. I like window shopping at boutiques.
Wait……
Fundamental difference between this and the Motorola PowerPC chips issue is that Apple now owns the company that makes the chips and has more control over the innovation. Motorola couldn’t keep up with what Apple wanted. A good move in my opinion.
–now they are in the hands of competitors–
Competitors that are making a huge amount of money from the iTunes business. Kill the iTunes biz, and they’ve got a LONG way to go to make even a percentage of what they’re currently making from those properties.
^^ You guys have no idea what you are talking about ^^
PPC was not a mistake, not by a long shot, nor was it a “fiasco”. They simply were not keeping up with Apple’s needs, especially in the portable computing arena. I think PPC technology still has much more potential than any of Intel’s current “innovations”, they are just not positioned to be much help to a consumer/mass-market computer maker like Apple. And let’s not forget that we shareholders have been nothing short of outspoken about Apple needing to spend some it’s excess cash. Right?
On the other hand, maybe someday Apple will be able to think about buying a controlling share of Intel – Hmmm. Now that’s something to think about.
278 million is pocket change for the worth they gain in something called…leverage. The speculation and hype surrounding the possibilities of buying this chip is worth 278 million.
Now everyone is scrambling to change the questions they are going to ask at the quarterly earnings call this evening. Maybe even the distraction of this is worth 278 million. ha
To quote Switcher: I am not so sure I like where this is going. Isn’t this the same road Apple has been down before where it tries to be different and use a different processor than the rest of the industry? Did we not see the mac go through this and finally just adopted the x86 from Intel?
Yep, Apple did use chips different to Intel x86’s in their computers before – from that little known manufacturer IBM.
Gosh, how those chips were really slow! Or do people still believe in the Megahertz myth..?
As long as the computer chip relationship is not changed with Intel,
I think is is cool for Apple to own the chip for the platform it created. Intel can give help as needed without changing any of their process and Apple can develop its own chip in house to work with its iPod and iPhone. Brilliant, actually. Why would Intel object…maybe they suggested it…the more Mac growth, the more Intel makes. Everybody wins!
More proof Jobs is smarter than the great unwashed. THEY want him to blow Apple’s cash on Adobe or Yahoo, though neither could provide the returns to justify the investment. In contrast, PA Semi will provide the custom mobile chips to drive the iPhone, Touch and maybe the lowly iPods into the future.
But since they’re a *design* firm, they’ll still need someone to make the chips. That’s an opportunity to bring someone else into the Apple eco-system, if he chooses not to rely on Intel.
The stock is still “down” … at about $160 … so if I call one broker to sell and the other to buy … ? Oh, wait, there’s the transfer wait time. Well, I need to sell anyway … don’t have to buy AAPL. Besides, it usually takes several days for the stock to recover from a semi-random senseless drop.
The chip in the iPhone is not driving anyone’s business. Not like the x86 family. Nor will replacing it drive the competition to follow suit. A new lower-power chip may drive sales up, but the niche is somewhat limiting. Nokia isn’t going to be driven to switch CPUs no matter how much of the smartphone segment Apple takes. Sure, they can pressure for a lower-power update to what they are using, but that’s minor. For less than 5% of their cash-on-hand, Apple has a chance at expanding its iPhone market … more power to them.
@Raymond in DC,
Ah, good point. So right now it’s just as likely that Intel will end up manufacturing the chips that PASemi designs.
Talk about controlling the whole widget, man they are taking this right to the chip level. One step ahead of everyone, again.
How exactly does some little niche company build processors in the quantities that Apple will need- now that they are selling millions of units per quarter? Given that Apple has in the past had trouble getting enough quantity from the big boys?
Maybe they are buying the intellectual property, to be built by Intel or someone else.
Note that this is a chip DESIGN company. Apple will still need to get someone else to manufacture it, but I imagine they can play off the various manufacturers (IBM, Intel, Samsung, etc) to get the best price.
Plus Apple control the technology and can take it in directions that others can no longer follow. Even if they drop it in a few years the effect on the bottom line is negligible. More likely they would licence the design to others – sorry, forgot this was Apple!
Apple may be righting old wrongs here, or it may be bringing onboard expertise to tweak power management. Moving back to the PowerPC architecture is a non-starter at this juncture, unless it’s for the purpose of creating a gaming device (a la XBox 360, which also uses IBM PowerPC architecture).
I’d like to stay tuned to see where this goes, if anywhere. That’s a lot of talent they picked up, with no apparent place to go.