Why Apple bought PA Semi

“Just ahead of its recession defying, record setting Q2 2008 earnings reports, Apple revealed plans to buy PA Semi, a chip designer specializing in processors based on IBM’s Power architecture,” Daniel Eran Dilger writes for RoughlyDrafted. “This news sparked a flurry of confusion from observers: why is Apple getting into the semiconductor business after partnering with Intel in its Mac systems, aligning with ARM licensees for its mobile WiFi iPhone platform, and particularly after decisively migrating away from PowerPC in 2006?”

“Apple’s acquisition target isn’t a chip manufacturer. As a ‘fabless’ chip designer, PA Semi (short for Palo Alto Semiconductor) only develops chip designs that are actually built by other companies,” Dilger explains.

“PA Semi licensed IBM’s Power architecture technology to design its PWRficient series of 64-bit processors suitable for use in applications from desktop computers to server storage controller backplanes,” Dilger reports.

“EETimes reported that just two days prior to the announcement of its purchase by Apple, ‘PA Semi informed its customers it was being acquired and it could no longer guarantee supplies of its chips. The startup did not identify the acquiring company but said that company may be willing to supply the chip on an end-of-life basis, if it could successfully transfer a third-party license to the technology,'” Dilger reports.

Dilger reports, “The report then flatly reiterated that ‘PA Semi customers were told the acquiring company was not interested in the startup’s products or road map, but is buying the company for its intellectual property and engineering talent.'”

Much more in the full article here.

[Thanks to MacDailyNews Reader “Brawndo Drinker” for the heads up.]

28 Comments

  1. Apple doesn’t frivolously buy ‘assets’ that won’t help the company in some way (i.e. Final Cut, Logic, Shake… or, for a negative example: M$ / Yahoo).

    In hindsight, it seems that every Apple acquisition has had some sort of strategic importance to where Apple wants to position itself as a company.

    I would be willing to bet that the purchase of PA Semi will yield some amazingly kick ass results in the next few years… get ready to buy more stock.

    MaWo: ‘economic’. As in:

    “We’ve had one of these before, when the dot-com bubble burst. What I told our company was that we were just going to invest our way through the downturn, that we weren’t going to lay off people, that we’d taken a tremendous amount of effort to get them into Apple in the first place — the last thing we were going to do is lay them off. And we were going to keep funding. In fact we were going to up our R&D;budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time.”

    — Steve Jobs speaking with Fortune senior editor Betsy Morris, March 07, 2008

  2. Look in the brains of Steve! What will he leave us in 10 years from now.

    All Apple products with PASSD.

    A hughe ground database.

    Apple’s own satellite-system

    Apple’s own telecom-system

    Nomore software on your Mac, only start up and find it in Safari.

    And…… Google & Apple, twee handen op één buik!

  3. Apple’s not interested in building chips; Apple’s interested in controlling chip design. That’s what Apple did with Motorola and IBM – Apple had to take on chip design because Moto and IBM weren’t interested in desktop PCs; they wanted imbedded and server-type processors.

    One of the reasons Intel was so hot to get Apple as a customer was to get the benefits of Apple’s chip design teams. Apple owns a lot of technology which has made chips use much less power than traditional (older) Intel chips.

    Apple’s protecting its position and continuing the business of designing low-power, highly efficient chips. Apple doesn’t need to (and won’t) produce the chips, but it can license the technology to Intel or any other chipmaker to serve Apple’s interests.

    Say Apple develops new technology (or maybe PA Semi already has) which significantly reduces the power consumption of a mobile computer. Think of the advantage Apple could have with the iPhone if iPhones used 1/2 the power of anything from LG, Nokia, etc. And Apple wouldn’t have to share, because Apple wouldn’t rely upon licensing its technology to make money.

  4. I think we are going to se some specialized co-processors built into apple products. It will be seamless with OSX. This will give Apple hardware running OSX an even greater advantage over the Dull box companies running generic hardware. Speck out the same processors etc, only the Mac with these special co-processors will be many times faster. Apple already does this with Core technology, handing things off to graphic cards etc, so why not just build the chips right into the Mother board.

  5. iPhone has 3 chips in it. Desktops sometimes 2, but mostly one that is meant to do the bulk of processing. What if this is related to using multiple smaller chips in a product that allows you to spread the computing load to more processors? Low power chips that don’t require fans. The resulting iMac would be as thin as an iPhone.

    I believe iPhone ushered in something new at Apple beyond a single product. It required a lot of out of the box thinking that could have major implications for computer design.

    Here’s hopin’.

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