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

[AppleInsider]

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.

Though still considered a startup company, PA Semiconductor has already encountered unprecedented success in selling its products and is heavily invested in military technology. More than 10 defense devices, including some from Lockheed Martin and Raytheon, already use the young electronics firm's PWRficient processor to varying levels across every branch of the US armed forces. This bucks conventional industry wisdom, which hesitates to use brand new technology until well-tested.

"I've never seen such fast adoption of a product in the [military aerospace] world," the alleged insider says.

Apple, however, is said by PA Semi to be uninterested in continuing development of those chips and may farm out production on end-of-life terms only if it can transfer a third-party technology license. That will leave many of the smaller company's present-day customers without a long-term source of parts and is already seen as problematic for military contractors like Raytheon, which often spend "many" years developing and maintaining combat equipment.

The risk of an abrupt processor supply cutoff is also reportedly enough that the US Department of Defense may be compelled to plead its case to Apple. No intervention is currently underway, but one is described as possible should PA Semi's customers, and thus DoD part suppliers, grab the attention of the government branch.

"We've had customers saying they are going to the DoD on this one," the source claims.

For its part, Apple remained silent on the reasoning and effects of the acquisition during its second-quarter conference call.

[ View this article at AppleInsider.com ]

[Ireland]

I personally think they bought them because of the fish.

[Chris_CA]

Originally Posted by AppleInsider

Though still considered a startup company, PA Semiconductor has already encountered unprecedented success in selling its products and is heavily invested in military technology. More than 10 defense devices, including some from Lockheed Martin and Raytheon, already use the young electronics firm's PWRficient processor to varying levels across every branch of the US armed forces.

Now every soldier, sailor, marine and airman will have their own tactical communications & media device.
Think iPhone with satellite & uhf comms, thermal & infrared camera and maps.
Ability to locate everyone and send messages to individuals/groups directing movements at the lowest level needed.
If captured or the phone is lost, it can be erased remotely.

Movies, music, email, websurfing, etc. when on downtime.

[tmedia1]

Perhaps this chip will be at the heart of a future Newton/Tablet device....

or the 5G iPhone :<>

[Virgil-TB2]

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

[delreyjones]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Are you confident that Apple doesn't already sell to the "war industry"?

[walkerdarin2003]

Originally Posted by delreyjones

Are you confident that Apple doesn't already sell to the "war industry"?

lol I am a Marine I deff own a bunch of Apple products. While I was deployed I noticed a trend. Just about every Marine, sailor, solider, and airman has a ipod. Oppsy....

[deltatux]

This actually irritates me a lot, especially since the possibility that Intel is still providing the overheating and power hungry chips are really starting to annoy me a lot. I still stand on my stance of the Intel partnership like I did in 2006. A big mistake in the technical point. If it did go over to P.A. Semi, not only will the processor be a lot power efficient, yet still fast; but also continue competition in the industry instead of continuing to feed an already overbloated giant which thinks that overheating processors are fine. (Idling at 40C is NOT normal!)

I have been disappointed in Apple ever since their transition to Intel processor. The Macbook would've been even better if only it used less power and won't overheat so much. I could have 8 hours of battery life with P.A Semi's PA6T.

deltatux

[vinea]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Buh bye. I saw ruggedized Mac Minis and Powermacs on Gizmodo years ago. They sell plenty to DoD.

[federmoose]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

I dont think you've been here long:
http://www.appleinsider.com/articles...r_lawsuit.html

And from forbes:
http://www.forbes.com/home/technolog..._1221army.html


P.S. Hey everyone. Been lurking here for a year now and figured it was time to make an account!

[merdhead]

If you wonder where AI gets its super-secret information from, try this article:

http://www.eetimes.com/rss/showArtic...leID=207401605

Also, I note they're still pushing their Atom wheelbarrow, although the wheel fell off some time ago. You've got to love their logic - they're buying processor IP and development skills (and if you read the above article you'll see that its not just PowerPC but ARM architecture too) so that they can... use Intel's processor! That's right their going to rework Intel's power hungry, huge, standalone processor, because Intel lets their customers do that. Or at least that's what the geniuses at AI think.

[merdhead]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

My god you're right. You should stop using Apple gear of they sell stuff to those death mongers in the military. Aslo I hear Boeing sell airplanes to the military, as do Airbus, so I guess you won't be taking any flights any time soon. And GMC and Ford sell to the military so you'd better stay out of cars (Toyota sell to the Japanese military).

Also Intel already sell their processors and other ICs to the military, so you've probably already supported the death mongers. Oh the shame.

[iPeon]

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

Speculations... speculations... speculations...

Let's all speculate, so as to agree upon a speculation, that will still just be a speculation as to why Apple purchased this company. Ya, that will result in truth.

[mdriftmeyer]

I love the speculation.

The analogy to Apple's prior purchase for IP and engineering sources that people think only aided OpenGL is truly naive.

Products take 24 - 36 months to see to fruition.

Do the math.

[SpamSandwich]

Originally Posted by merdhead

If you wonder where AI gets its super-secret information from, try this article:

http://www.eetimes.com/rss/showArtic...leID=207401605

Also, I note they're still pushing their Atom wheelbarrow, although the wheel fell off some time ago. You've got to love their logic - they're buying processor IP and development skills (and if you read the above article you'll see that its not just PowerPC but ARM architecture too) so that they can... use Intel's processor! That's right their going to rework Intel's power hungry, huge, standalone processor, because Intel lets their customers do that. Or at least that's what the geniuses at AI think.

If that's where AI got their info, they need to credit the source. Especially since it's not a secret insider providing information.

[solipsism]

Originally Posted by SpamSandwich

If that's where AI got their info, they need to credit the source. Especially since it's not a secret insider providing information.

I don't know if I'd say they have credited the source, but they have a link to the source in the article.

[Olternaut]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Not me. If anything this would encourage me to buy more Apple products. Imagine if Apple had designed Ironman's power armor!
In any case, read the article again. This story has nothing to do with Apple doing business with the military....at least in this instance. If they bought PA Semi and Semi had to deliver products to the military Apple will simply fulfill the original orders......thats all.

[GregAlexander]

Worst case scenario for the DoD would be Apple selling the chip design to IBM, wouldn't it?
Surely IBM would be happy to have that part of the business?

Anyway, I wonder what technology/patents/people PA Semi has that's worth $300 million.

Obviously 150 employees aren't worth $2million each. And if the people weren't going to continue working on something in their own line of expertise they'd leave anyway

So what technology & patents do they have that are NOT the PWRficient CPU?

[solipsism]

Originally Posted by Olternaut

Imagine if Apple had designed Ironman's power armor!

• It wouldn't come in red.
• It would have a glowing Apple logo on the front
• MS would try to copy it
• Dvorak would claim Iron Man an enemy of the people to boost page hits
• There wouldn't be a user changeable nuclear power supply
• It would be re-spelled iRonMan

[Olternaut]

Originally Posted by solipsism

• It wouldn't come in red.
• It would have a glowing Apple logo on the front
• MS would try to copy it
• Dvorak would claim Iron Man an enemy of the people to boost page hits
• There wouldn't be a user changeable nuclear power supply
• It would be re-spelled iRonMan

lol agreed!

[webmail]

Anyone who thinks macs aren't in the military, either doesn't know, or isn't high enough up.

Macs run things behind the scenes at ALL the major intelligence agencies. The NSA highups/highend groups? All Macs, same with the CIA, FBI, Homeland Security, US Marines, Airforce, Army, Navy.

Don't be naive, I know about 8 years ago there was a Mac controlling launch of weapon tubes in subs.


Those big decisions to move 10,000 troops, or divisions? Those are done on a mac, taking inventory of nukes by intelligence agencies? Mac, lots of systems are on mac, and even working for the military most people only see the windows common access card machines and not the real face of the does-the-dirty-work machines. They are mac.

[bigpics]

Quote:
Originally Posted by Virgil-TB2
All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Originally Posted by vinea

Buh bye. I saw ruggedized Mac Minis and Powermacs on Gizmodo years ago. They sell plenty to DoD.

Thanks to everyone saving me the trouble of thinking of something pithy to say to this PC buzzword spouter. However......

.....the story does speak to the changing nature of Apple, Inc and its place in US and world society. A,I (interesting conjunction of initials, no? accident?) Before our eyes Apple's gone from being an inconoclastic company with a cult following to becoming a RRBMC: a really really big megacorp. and the things it does or doesn't move stock markets, it negotiates with governments and all the Fortune 1000. etc. et al. ad infinitum.

So while I stand with other posters in not defaming the role of our volunteer military forces in helping preserve a reasonably stable country in a world more stable and democratic than it would be without them - as however imperfect we are as a civilization - the candidates for our replacement over the last century and those on the horizon of the next would not have been preferable.

Still, I am beginning to speculate on the name of the team Apple will field in the upcoming international Roller Ball league.....

(I'm personally a fan of the original 1970's James Caan version of the film)

[solipsism]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Virgil,
That is just asinine. The US military uses Windows, Linux and OS X, as well every major PC HW vendor. They also use a lot of items from companies that I'm sure you own. Also, supporting the US military is not the same as supporting the war.

Apple computers still satisfy only a tiny portion of the military's voracious demand for computers. By Wallington's estimate, around 20,000 of the Army's 700,000 or so desktops and servers are Apple-made. He estimates that about a thousand Macs enter the Army's ranks during each of its bi-annual hardware buying periods.
(source)

PS: Does the saying, "Don't hate the player, hate the game" apply here?

[GQB]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Someone push the Berkeley button or something?
And considering that if you're using a computer and the internet, you're benefiting from that military/corporate collusion, so think hard before condemning Apple for possibly acquiring a company that has some military dealings.

[Mr. Me]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

I can respect your sentiments. There was a time when I might have agreed with you. However, that was before I learned that everything--I mean everything--is used by the military.

If you had not been born yesterday, then you would know that the U. S. Army has used Macs for its web servers since George Washington was its top general. During the first Gulf War, Photoshop running on Macs and System 7 enhanced the photographs of our neat bombing of Bagdad and the Iraqi countryside. NeXTstations were a favorite of the National Security Agency.

About the OP: This has to be one of the dumbest pieces of speculation I have ever read on AppleInsider. It is dumb on so many levels. The notion that Apple, one of the best run companies in any industry, would buy a company only to dump its products defies all logic. Also, the notion that the Department of Defense [in a Republican Administration] would allow a [Democratic-leaning] company to kill an essential component of defense equipment makes no sense.

[omnivector]

Originally Posted by deltatux

This actually irritates me a lot, especially since the possibility that Intel is still providing the overheating and power hungry chips are really starting to annoy me a lot. I still stand on my stance of the Intel partnership like I did in 2006. A big mistake in the technical point. If it did go over to P.A. Semi, not only will the processor be a lot power efficient, yet still fast; but also continue competition in the industry instead of continuing to feed an already overbloated giant which thinks that overheating processors are fine. (Idling at 40C is NOT normal!)

I have been disappointed in Apple ever since their transition to Intel processor. The Macbook would've been even better if only it used less power and won't overheat so much. I could have 8 hours of battery life with P.A Semi's PA6T.

deltatux

You're an idiot. The intel processors that ship in macs today are much faster than their g5 counterparts, not to mention use less power. ON TOP of that if it weren't for the intel switch, it's likely Apple wouldn't be anywhere near where it is today thanks to all the PC --> Mac switchers who switched specifically because they could run windows/mac at the same time via BootCamp or VMware.

[Splinemodel]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

Well, Intel and probably about 40% of the high tech consumer items you own are produced by companies that also sell to the "war industry." Not to mention the fact that if it weren't for the US DoD, there's a very good chance the internet, cellular networks, and many, many other technologies you take for granted would never have gotten started.

Originally Posted by omnivector

You're an idiot. The intel processors that ship in macs today are much faster than their g5 counterparts, not to mention use less power. ON TOP of that if it weren't for the intel switch, it's likely Apple wouldn't be anywhere near where it is today thanks to all the PC --> Mac switchers who switched specifically because they could run windows/mac at the same time via BootCamp or VMware.

The Core2's use less power than G5 (PPC970) because (A) they scale the clock when not needed and (B) they are built on a lower voltage silicon fab that did not exist a few years ago. In other words, they are well suited for use in PCs, which have "bursty" power needs. GCC for PPC is also pretty lousy. If you run a Core2 and a POWER4/5/6 at full speed, the PPC is more efficient. So, for these high-performance embedded applications, the PPC makes more sense. If this weren't the case, the PPC would not dominate the game console scene.

Apple produces a handful of embedded products: iPod, iPhone, TimeCapsule box, AppleTV, Airport express, etc. Who knows what's on their roadmap. When it came out, I was struck by the fact that the Intel Atom's core consumes nearly 30 million transistors. For the 50M transistor budget of the Atom, you can roll out a PPC with one core and a lot more cache, or two cores and still more cache. Additionally, you could roll out a PPC with similar performance, but built on higher voltage silicon that affords lower leakage when asleep.

[winterspan]

Originally Posted by deltatux

This actually irritates me a lot, especially since the possibility that Intel is still providing the overheating and power hungry chips are really starting to annoy me a lot.

I still stand on my stance of the Intel partnership like I did in 2006. A big mistake in the technical point. If it did go over to P.A. Semi, not only will the processor be a lot power efficient, yet still fast; but also continue competition in the industry instead of continuing to feed an already overbloated giant which thinks that overheating processors are fine. (Idling at 40C is NOT normal!)

I have been disappointed in Apple ever since their transition to Intel processor. The Macbook would've been even better if only it used less power and won't overheat so much. I could have 8 hours of battery life with P.A Semi's PA6T.

deltatux

First of all, you can't possibly be calling Intel's processors overheated and power hungry in the context of going back to POWER. That is BEYOND IRONIC. Don't remember the G5 that needed WATER COOLING??

Ignoring that for a minute, the idea that Apple would be better off had they stayed with PowerPC instead of switching to Intel is just completely false. I don't even mean in terms of opinion.. I mean in terms of measurable, objective results.

On the contrary, the Intel transition was the PRIMARY factor in the Mac's amazing growth and success over the last few years. In fact The intel switch was one of the best moves in Apple history. Intel's x86 processors are faster, more efficient, and have a great future ahead, including the Q4 release of Nehalem.

Most importantly, switching to Intel's platform has made possible Apple's current growth and profitability in the PC market by creating two opportunities:

1) Using X86 processors created the ability to use Bootcamp for dual-booting Windows Xp, and likewise run high-speed virtualization via VMware and Parallels. Don't underestimate the power of being able to slowly ween off of windows and run legacy windows applications. I would even argue that this fact alone is responsible for a huge percentage of conversions from windows.

2) Intel's processors gave Apple the opportunity to benefit from the economies of scale that result from the enormous worldwide x86 market. This allowed Apple to become much more price-competitive in the market versus the PC manufacturers, while at the same time keeping their margins high for profitability. There is no way they could maintain this cost advantage by going back to the POWER market, which is a tiny fraction of the size of the x86 market. This effect would only be magnified even more if they used some type of non-commodity, in-house processors made by their acquisition that were contract manufactured. At the same time, POWER may be popular for certain embedded product niches and for IBM's supercomputers, however most of the R&D money for laptop/desktop IC is going into x86 and this will not change anytime soon. Intel and AMD x86 products will dominate the scene for the foreseeable future.

[Marvin]

I can't see Apple going back to a PPC architecture. A lot of software is Intel-only. Perhaps they will use the intellectual property along with their Intel partnership to produce some exclusive x86 chips that make Apple's products better.

Originally Posted by Splinemodel

If you run a Core2 and a POWER4/5/6 at full speed, the PPC is more efficient. So, for these high-performance embedded applications, the PPC makes more sense. If this weren't the case, the PPC would not dominate the game console scene.

So that's why the XBox 360 power brick is so small:



Presumably the Intel equivalent would have a bigger one? Chip architecture aside, the PPC developer tools are terrible and in the end, software optimization really matters. Theoretically, Altivec should have meant Mac apps ran faster than their PC equivalents and they didn't.

In an ideal world, maybe PPC would be the better option but it's about compromise in order to deliver a cost-effective, powerful product and IBM consistently fail in that regard.

The Nintendo PPC chips are very slow, the XBox 360 chips are hot and power hungry meaning red rings of death, huge power supplies and noisy fans. The PS3 is just far too expensive and the developer tools are very difficult to work with and therefore it greatly underperforms - this means games come out for the XBox 360 first and a lot of titles look better on the 360 and some don't even make it to the PS3.

In summary, PPC chips are slow, hot and expensive - we are all familiar with that experience from the PPC Macs.

We'll never know if Intel chips would have made the consoles better because it depends on the implementation but the decision to go PPC was made a while ago and looking at the gaming scene, I think it was a big mistake.

Now if better PPC chips can be made than the Intel equivalent like they are in the server space then I guess there's no harm in using the best products available but more resources have to be spent on development.

I suppose the current cocoa touch apps will have to be recompiled to run on an Intel chip anyway so maybe porting to a PPC one won't be any more troublesome.

But the final issue is scalability. Could the PPC chips be delivered in a sufficient quantity and time scale? At least Intel deliver on chips. IBM for example seems to have nothing for years and then BAM 5GHz. You can't rely on that cycle. To sustain long term growth, you need incremental updates and be able to deliver supply for demand.

Overall, I'd prefer Apple to support Intel and their Atom chip even if it is a fraction slower or less efficient than some PPC chip and instead use the techniques the company they bought used, to help Intel make those chips better. IBM screwed Apple so Apple should take techniques to make efficient PPC chips and give them to Intel. If Apple strengthen their ties with Intel, they will be in a very good position for their computer lineup.

[mdriftmeyer]

Don't expect Apple to use Atom.

[mdriftmeyer]

It truly amazes me how dense people are on this board. Apple [NeXT especially] has and never will be a single chip platform company.

[vinea]

Originally Posted by mdriftmeyer

It truly amazes me how dense people are on this board. Apple [NeXT especially] has and never will be a single chip platform company.

Well, they have been through periods. Serial monogamy seem the norm with occasional periods of silicon polygamy during transitions...

[huntercr]

Having never successfully called anything like this in my life, I've got to do as little dance that I successfully called the reason for this purchase of P.A. Semi yesterday.

YAY! OK.. that's enough gloating... back to work for me.

[solipsism]

Originally Posted by Marvin

So that's why the XBox 360 power brick is so small:

It does have 3x PPC CPUs each running at 3.2GHz.

[Crtaylor]

I just hope Apple isn't biting off more than they can chew. I know they were more interested in the intellectual property, which is perfectly fine, but they should have payed more attention to the United States military's stake in this company. They were probably using these chips for a good reason and a noble cause, and Apple should not abruptly cut off the supply.

However, I still do not think that this generally is a lost cause here. I'm sure the military and the government have already done a lot of experimental engineering that is very close in being part of tomorrow's technology. As other users have mentioned, when in need of technology the use the best of the best, including Macs. I think as long as Apple can execute this transition in a way that respects our armed forces, there is still a chance to avoid an enditement.

[solipsism]

Originally Posted by Crtaylor

I just hope Apple isn't biting off more than they can chew. I know they were more interested in the intellectual property, which is perfectly fine, but they should have payed more attention to the United States military's stake in this company. They were probably using these chips for a good reason and a noble cause, and Apple should not abruptly cut off the supply.

However, I still do not think that this generally is a lost cause here. I'm sure the military and the government have already done a lot of experimental engineering that is very close in being part of tomorrow's technology. As other users have mentioned, when in need of technology the use the best of the best, including Macs. I think as long as Apple can execute this transition in a way that respects our armed forces, there is still a chance to avoid an enditement.

1) You assume that Apple didn't research the company before buying
2) You assume that Apple is going to dead stop supplying P.A. Semi customers
3) You throw out indictment, albeit misspelled, implying a serious crime is being committed by Apple

That is pretty ballsy. Do you have any supporting evidence?

[wtbard]

I think the main reason Apple bought the company was so they could produce custom parts in secret. Currently, any commercial part they buy is subject to analysis and articles on future products. This would allow them some privacy, especially for new products.

[melgross]

Originally Posted by Virgil-TB2

All I can say is that if Apple *doesn't* cut itself off from the war industry, I won't be buying another Apple product ever. I know lots of other people probably feel the same.

That's stupid. Most companies sell parts to the "war" industry. You just don't know about it.

Go live in a cave.

[BoC]

Between the management advice from Peter Drucker to the comments in Kahney's recent book "Inside Steve's Brain", the thread of Apple going after SPECIFIC processes and products to achieve a primary product goal seems to come back to mind over and over.

Steve at Apple has made purchases time and again for a single reason.

That PA Semi might offer more than a single product advantage is great, but I will bet Jobs had a specific chip or chip set they envisioned for a specific product that PA Semi would give them a strategic advantage in to justify the purchase.

[bigdaddyp]

Originally Posted by winterspan

1) Using X86 processors created the ability to use Bootcamp for dual-booting Windows Xp, and likewise run high-speed virtualization via VMware and Parallels. Don't underestimate the power of being able to slowly ween off of windows and run legacy windows applications. I would even argue that this fact alone is responsible for a huge percentage of conversions from windows.

That is exactly why I became a switcher last year. I had long admired Mac OSX and the flat panel iMacs but had been worried about loosing the ability to run Windows apps. There was also the fact that Mac hardware was more expensive then its Windows equivalent. After the switch to Intel I had no reason not to try the Mac and have been loving it ever since with few if any regrets.
Jim