Apple Buys Chip Designer

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.

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.

"Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans," said Apple (nasdaq: AAPL - news -

people ) 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.

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.

PA Semi better take a look at what Apple did to the last small company that designed their iPod iPhone chips ... Portal Player

They did the same thing they did to Motorola and Texas Instruments, and I'd bet there are others -- chose the best technology available. Companies that can't keep up get passed by (though it took far too long for Moto, IMHO).

Fromm Gogle news:

Apple's PA Semi buyout motivated by assets, not products

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By Aidan Malley Published: 07:30 PM EST

Despite speculation that Apple's acquisition of PA Semiconductor was motivated by the chip maker's specific products, a new report reveals that the iPhone designer is interested more in the buyout for its promises of intellectual property and development expertise -- and may be causing a crisis for the US Department of Defense in the process.

On Monday, just two days before the $278 million buyout was exposed, PA Semiconductor was known to have warned customers that a buyout by a then-unnamed company was entirely disconnected from its existing and future architectures, according to EETimes.

Instead, the buyer (since identified as Apple) is focusing on more abstract intellectual developments and engineering staff, leaving the door open to the use of Intel's Atom platform for future Apple designs.

PA Semiconductor is best-known for developing very high efficiency embedded processors, such as a dual-core, 64-bit PowerPC-based chip that runs at 2GHz but uses only 15 watts of power. While the product itself no longer useful to Apple, which has switched all its computers to Intel's x86 architecture, the achievement itself has drawn attention from since its launch in February of last year by outperforming other rivals in the field while simultaneously running more efficiently.

Nonetheless, Apple's takeover may leave many of those customers -- and the US military -- hanging out to dry, according to an unnamed employee of one of the affected firms.

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