“Apple Inc.’s A4 chip, unveiled last week as part of its iPad, shows how Chief Executive Officer Steve Jobs is extending control over the company’s hardware at the expense of Qualcomm Inc. and Intel Corp.,” Ian King and Arik Hesseldahl report for Bloomberg.
“Instead of buying an off-the-shelf part, Jobs had Apple’s engineers design the A4 chip, giving them influence over its cost and functions, said Will Strauss, an analyst at Forward Concepts Co., a researcher in Tempe, Arizona,” King and Hesseldahl report. “‘He wants his own ecosystem and doesn’t want to be beholden to anyone,’ Strauss said in an interview. ‘It’s both maximizing his margins and maximizing his control.’”
“Apple’s decision to design its own part is a blow to Intel, which is trying to win a foothold in mobile devices with its Atom product, said Jim McGregor, an analyst at research firm In- Stat in Scottsdale, Arizona. Apple will probably use a version of the A4 in future models of the iPhone, he said,” King and Hesseldahl report. “‘Every step that Apple has taken, from the iPhone to the tablet, has been directly in the sights of Intel, and where it has been wanting to go with Atom,’ McGregor said. ‘Intel has been completely rebuffed.’”
“The iPad is a high-profile attempt to crack a market that Qualcomm and Intel have set their sights on, said Jagdish Rebello, an analyst at El Segundo, California-based research firm ISuppli Corp,” King and Hesseldahl report. “‘Intel would have wanted to get into this device, Qualcomm would have wanted to get into this device,’ Rebello said. He also expects Apple to use the A4 in future models of the iPhone.”
“The A4 processor costs about $15 to make, according to Broadpoint AmTech Inc. That would make it the most expensive semiconductor component in the iPad, behind memory chips. The total cost of the iPad’s parts is $188.50 for the cheapest model, which will retail for $499, Broadpoint said,” King and Hesseldahl report.
“In April 2008, Apple bought closely held semiconductor designer P.A. Semi Inc. That company’s expertise in low-power chips probably explains the iPad’s 10-hour battery life, said Strauss from Forward Concepts,” King and Hesseldahl report. “Making a processor run quickly without draining the battery is the biggest challenge Intel faces in cracking the mobile market, Strauss said.”
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