Apple Buys A Chip Company

Posted by: Arik Hesseldahl on April 23

Word today is that Apple is buying PA Semi. The reported price is $278 million in cash.

This is unexpected, but in light of Apple’s strategic direction, and competitive developments, makes complete sense. PA Semi, launched in 2003, focuses on building powerful embedded processors that are highly power efficient.

But what’s curious about this purchase is about the chip it produces. PA Semi’s chips are built on the Power architecture, which for years was the basis of the Mac during the PowerPC years. All that internal Apple experience developing for the PowerPC architecture is clearly going to come into play once again. But where in Apple’s lineup will the chip appear?

The reports say that Tony Fadell, head of Apple’s iPod division spearheaded the acquisition, which is a pretty strong indicator of where the chip is likely to be used: In future iPods and iPhones, and future products in that family. It’s also a pretty strong indicator of whose chip will not be used in those products: Intel’s.

Ars Technica has dubbed one of PA Semi’s chip a “wonder chip.” Its oddly-named PWRficient chips dynamically turn sections of the chip on and off as needed, rather than leaving each section of the chip powered up when its idle. As Jon Stokes at Ars Technica, its like turning off the lights in each room of your house when you’re not using it. If you need the room, turn the lights on. When you’re not in it, turn them off. The result of this power-conscious design is a chip that can run as fast at 2 GHz, but consumes only 5 to 13 Watts.

Intel had been hoping to get a version of its new Atom processor into some next-generation iPhone, but its hopes now seem dashed.

The news is hitting on the day that Apple reports earnings for its fiscal second quarter of 2008. Expect lots of questions from analysts on the conference call tonight. I would hope that COO Timothy Cook says a little more than the “no comment” line coming out of Cupertino so far.

I suspect that there’s more to owning this chip than simply providing the future computing engine for future iPods and iPhones, though it would appear that current suppliers like Samsung are probably feeling a lot like the executives of PortalPlayer, now a unit of Nvidia, did when they learned they weren’t going to be the iPods main chip supplier any longer.

Apple is also getting a pretty smart design team. The head of PA Semi is Dan Dobberpuhl, a smart designer who’s was lead designer on the Alpha Processor at Digital Equipment Corp., and on the StrongARM mobile chip initially developed at DEC, but later sold to Intel, and ultimately sold off to Marvell.

But I also think there’s a bigger picture here. There are probably devices in Apple’s pipeline that are related to the iPod and iPhone but otherwise very different and far more versatile than what has come before. They’re going to need a powerful computing engine in them, but since they’ll probably be mobile, it will have to a miser when it comes to power consumption. The thinking inside Apple must be that it will be easier to have an in-house chip that it can customize to its needs, rather than a third-party chip from Intel, or Samsung or Broadcom, whose capabilities and specifications may not be exactly what it wants. Now Apple has its very own chip architecture and it can design precisely the chip the needs for whatever new devices it’s building. Apple has proven itself to be extremely fickle when it comes to the chip architectures it uses in its products. Depending on how powerful PA Semi’s long-term roadmap appears, I wonder if there’s any chance that some future branch of the Mac family, perhaps some kind of mobile tablet computing device, might be built on this PowerPC chip and not an Intel x86-based processor. Probably not, but then again, there was a time when a shift to Intel processors was unthinkable, and we know how that turned out.

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