Apple buys semiconductor firm for US$278m

24 Apr 2008

Apple has agreed to acquire a California-based ‘fab-less’ semiconductor manufacturer called PA Semiconductor for US$278m in cash.

It is envisaged PA’s high-power, low-cost chips could be used in future-generation iPods and iPhones.

PA Semiconductor was set up in 2003 by a group of tech industry veterans including Dan Dobberpuhl, acclaimed lead designer of the DEC Alpha series of microprocessors, the ultra power-efficient StrongARM microprocessors and the first multicore systems on chip with the SiByte 1250.

The company is a ‘fab-less’ chip maker in so far as it designs the chips and then licenses them for manufacture by third parties.

The company licenses the PowerPC instruction set from IBM, and its PWRficient chip offers three to four times the performance of existing chips for the same level of energy consumption.

The news could come as a nasty surprise for chip giant Intel as Apple switched from the Power Architecture to Intel’s Core processors for its entire line of computers.

Until now, there had been rumours that PA Semiconductor had a relationship with Apple for potential premier use of the PWRficient processors.

Intel has been trying to convince Apple to rely on its latest low-power chip line-up called Atom.

It is envisaged the PA Semiconductor acquisition will prove central to the design of future iPod and iPhone devices.

It is also envisaged that Apple plans to use future PA chips exclusively within Apple products and create an asset class that allows Apple design gurus to use the chips across a wide range of new products.

For the current family of iPhone devices, Apple has been using a range of different chips from various manufacturers, including Samsung and Texas Instruments.

By John Kennedy