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Apple buys chip designer PA Semi for $278 million

post #1 of 91
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An Apple spokesman confirmed Tuesday evening that the company has agreed purchase a boutique microprocessor design company known for sophisticated but low-power designs, Forbes is reporting.

The acquisition of the 150-person company, P.A. Semi, may outline a new direction for the Cupertino-based company's iPhone and iPod products while dealing a considerable blow to chip maker Intel, which has long been courting the electronics maker to adopt its own low-power processor family, dubbed Atom.

"Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans," said Apple spokesman Steve Dowling. He declined to go into the specifics of the agreement, but a person familiar with the matter speaking to Forbes said the deal would consist of a $278 million cash transaction.

Both Apple chief executive Steve Jobs and Apple iPod chief Tony Fadell are said to have been instrumental in the deal, which included negotiations that took place at Jobs' home in Palo Alto, Calif.

Forbes speculates that move on Apple's part is a strategic one aimed at assuring it can continue to differentiate its next-generation handheld products amongst a growing fleet of competitors, many of which may choose to base their designs around Intel's widely available offerings.

P.A. Semi was founded in 2003 by Dan Dobberpuhl, who was among the lead designers for the Alpha and StrongARM microprocessors put forth by Digital Equipment in the 1990s, according to the report.

In February 2007 the chip maker released a 64-bit dual core processor which it claimed was 300 percent more efficient than any comparable offerings, consuming only 5 to 13 watts while running at 2 gigahertz.

The efficiency of mobile processors has been of particular concern for Apple, particularly as it embarks in new business directions such as mobile phones where battery life is critical. As such, the power savings offered by P.A. Semi's designs may have been amongst the firm's most compelling assets in Apple's eyes.

In a report published Monday by Lehman Brothers, analyst Ben Reitzes cited sources in saying that Intel?s Atom chip (Silverthorne) may have failed to produce the kind of battery life that that Apple was seeking for its ultra-portable designs.

Apple is expected to formally announce its acquisition of P.A. Semi during this afternoon's quarterly earnings call, of which AppleInsider will provide its usual coverage.
post #2 of 91
Just to be clear before the rumors go crazy....

This is NOT because of iPhones & iPods (could be an extra reason)
This is NOT for desktop macs (mostly)

This IS for new computing device, aka the "tablet pda" style device that has long been rumored.

At least this is what I've heard.

I was told "think knowledge navigator + iphone + crack = "

The possible uses are more than just the new device, but the purchase is for that reason alone, not to power some iphones.
post #3 of 91
Oh my....
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post #4 of 91
The PPC days are gone, but I think it was this company that was trying to sell a dual core 2 GHz mobile PPC chip, before Apple switched to Intel. The article seemed to describe it without saying what the chip type was.
post #5 of 91
As you can see this company is based on Power architecture license from IBM...

Quote:

Technology Partners
IBM Power Architecture Agreement

PWRficienta low-power, high-performance, 64-bit family of single-chip processors-was developed by P.A. Semi under a Power Architecture license from IBM. Under the agreement, P.A. Semi has licensed the rights to design, manufacture, and sell processors that fully comply with current and future versions of the Power Architecture. Starting from this instruction set, P.A. Semi has created its own new microarchitecture from scratchthe PA6T core. P.A. Semi has leveraged its skills, proprietary methodologies, and patent-pending low-power technology to derive unprecedented performance per watt from the PWRficient processoras much as a tenfold increase over competing processing platforms.

Under the agreement with IBM, P.A. Semi will design, manufacture, and sell PWRficient chips based on current and future versions of the Power Architecture.

The Power-based microprocessor market is vibrant, diverse, and growing. According to The Linley Group, 2005 shipments of Power microprocessorsI were in the region of $1.4 billion and are forecast to grow by more than 60 percent, to $3.8 billion, in 2007. Uniquely, Power processor solutions span multiple markets -from high-end supercomputers and gaming consoles to high-volume microcontrollers and servers.

P.A. Semi is a founding member of Power.org, whose mission is to develop, enable, and promote Power Architecture technology as the preferred open-standard hardware-development platform.
post #6 of 91
Sounds like a well thought out acquisition. They seem to be more frugal than other technology companies of similar size, but it seems they spend their money more intelligently.
post #7 of 91
Quote:
Originally Posted by webmail View Post

Just to be clear before the rumors go crazy....

This is NOT because of iPhones & iPods (could be an extra reason)
This is NOT for desktop macs (mostly)

This IS for new computing device, aka the "tablet pda" style device that has long been rumored.

At least this is what I've heard.

I was told "think knowledge navigator + iphone + crack = "

The possible uses are more than just the new device, but the purchase is for that reason alone, not to power some iphones.

Yes but........
With Apple buying this company just now will they be able to come out with such a wonderous product by at least ............Macworld 09?? \
post #8 of 91
Ok this is about the dumbest idea they could have done. They are not in the Semi business, this is just going to drag them down.

Companies need to focus on what they do well, and Apple does not do SEMI well. I can see having a controlling interest or making investments to ensure your ideal are heard and solutions are provided but owning and operating it will only burn resources that could be used else where.
post #9 of 91
I don't see why this would 'drag them down'. It gives them better access to making custom chips and hence gives them an advantage over their competitors. I doubt Apple are going to be designing chips for other 3rd party companies, PA Semi will likely become an internal part of Apple. I would imagine they are as much buying the people (and their experience) as anything else...
post #10 of 91
Quote:
Originally Posted by Olternaut View Post

Yes but........
With Apple buying this company just now will they be able to come out with such a wonderous product by at least ............Macworld 09?? \

I think the timing of Apple's purchase may not be as important as when they started working together.

If Apple has been going down 3 or 4 prototype paths, trying to work out how best to make an iPhone 2 and iPhone 3, or a larger tablet/iPod Touch etc... they may already be running prototypes on PA Semi's chips. The purchase of PA Semi would then align with choosing that prototype as the basis for an upcoming design (probably not the immediate one - though possible).

That said... I can't work out whether PA Semi has chips in high end production. Their website says they are in production since Spring 2007 but the prices are for engineering samples, not production runs. Wikipedia has "rumours" that they might use Texas Instruments fabrication facilities... so I assume they aren't going yet?
post #11 of 91
Quote:
Originally Posted by Maestro64 View Post

Ok this is about the dumbest idea they could have done. They are not in the Semi business, this is just going to drag them down.

And yet - PA Semi is designing a processor (and related technologies). It outsources the building of the technologies to other companies...
(PA Semi might have designed the "iPhone" of the cpu industry...?)

edit: And PA Semi might have just the right engineers for Apple to work on the incredibly integrated technologies of future handheld devices.

This purchase may really be Apple buying them out of a hole.. a company with a great design, compatible with PPC (which is relatively good for Apple), no customers and no cash left to make a real go of themselves.

It's possible Apple tried to buy exclusive rights to the chip, and the owners of PA Semi said why not just buy us entirely.
post #12 of 91
This seems to be a great move for Apple. I was pretty impressed when I looked at PA Semi's website. I always thought Intel and ATI were the top two, but this company seems to be pretty impressive for a lesser known chip manufacturer. Only 5-13 Watts at 2 Ghz!? Up to eight PCI-e's and four Gigabit Ethernet controllers with 24 lanes each!? This was just too big of a deal for Apple to pass up (at least in my opinion)! It will defintiely help Apple get more ecofriendly and contend a lot more with the PC formats! Go to www.pasemi.com and see for yourself!
post #13 of 91
IMO, this is a great purchase. Whatever device they had in mind when purchasing PAS, they have some of the best experience in PPC/POWER development and tools.
post #14 of 91
Quote:
Originally Posted by Maestro64 View Post

Ok this is about the dumbest idea they could have done. They are not in the Semi business, this is just going to drag them down.

Companies need to focus on what they do well, and Apple does not do SEMI well. I can see having a controlling interest or making investments to ensure your ideal are heard and solutions are provided but owning and operating it will only burn resources that could be used else where.


No, no, you're missing the point. Apple is buying them for their brain power, chip design facilities, etc. They're not going to let the business continue to operate. They're raiding business for the people and the property. The company will do custom design and research for Apple.

I don't see this as a blow to Intel either. Intel just doesn't have what they need right now. You can't pin your hopes on something that may not be delivered when you need it. Apple was stuck in that position with IBM when they started blowing off Apple's G5 needs.
post #15 of 91
Quote:
Originally Posted by Maestro64 View Post

Ok this is about the dumbest idea they could have done. They are not in the Semi business, this is just going to drag them down.

Companies need to focus on what they do well, and Apple does not do SEMI well. I can see having a controlling interest or making investments to ensure your ideal are heard and solutions are provided but owning and operating it will only burn resources that could be used else where.

I am sure glad u aren't makin the decisions in Apple.
At least they have some smarts.
Sounds like an excellent purchase.
post #16 of 91
Quote:
Originally Posted by Crtaylor View Post

Only 5-13 Watts at 2 Ghz!?

The iPhone processor is probably 1W or so; this is for a new breed of laptops. I think now that OSX is ready for multiple architectures, Apple is leveraging this to keep ahead of one-processor competitors.

They added support for the iPhone CPU on top of having PPC support and x86 support in MacOSX. This device makes it really a slam-dunk to offer a new laptop/pad machine using a PPC. The apps are all already Universal for MacOS (well, ok there are some holdouts, but the VAST majority of apps are universal.
post #17 of 91
They are very few SEMI companies these days that own their own foundries. Most are fab-less these days that is nothing new.

Like I said there is other ways to get what you need from a Semi Company without buying it. All this is going to do is diver money and resources away from what Apple does well. Also since company is fab-less that means Apple now has to compete for fab time and Apple will be a small player in a very large market. Even big guy in fab-less SEMI have capacity issues with the big foundries out there. Foundry time is given to the highest margin products.

They could be buying the people, but if your a SEMI person why would you want to work for Systems company, the good people will leave because they will want to work on the next great great thing not what apple think is in their best interest.

Plus it creates a threat with other SEMI supplier who will be less than willing to share ideas because they are afraid those ideas might get used internally. Motorola shed its semi business for this exact reason, Other SEMI company did not want to work with them because they lost out too many times to Motorola's own internal SEMI business units.

Even IBM has shed some of it SEMI business for similar reasons.

It will be interesting to hear the reason has why they felt they needed to own a SEMI business.
post #18 of 91


DEC processor designers
+ Apple design
+ OS X

= Sounds great to me.
post #19 of 91
Quote:
Originally Posted by Maestro64 View Post

They are very few SEMI companies these days that own their own foundries. Most are fab-less these days that is nothing new.

Like I said there is other ways to get what you need from a Semi Company without buying it. All this is going to do is diver money and resources away from what Apple does well. Also since company is fab-less that means Apple now has to compete for fab time and Apple will be a small player in a very large market. Even big guy in fab-less SEMI have capacity issues with the big foundries out there. Foundry time is given to the highest margin products.

They could be buying the people, but if your a SEMI person why would you want to work for Systems company, the good people will leave because they will want to work on the next great great thing not what apple think is in their best interest.

Plus it creates a threat with other SEMI supplier who will be less than willing to share ideas because they are afraid those ideas might get used internally. Motorola shed its semi business for this exact reason, Other SEMI company did not want to work with them because they lost out too many times to Motorola's own internal SEMI business units.

Even IBM has shed some of it SEMI business for similar reasons.

It will be interesting to hear the reason has why they felt they needed to own a SEMI business.

For a lot of the reasons you suggest, I suspect that Apple was purchasing Intellectual property/patents. I will be surprised if Apple actually release a product that uses a RISC chip, the iPhone notwithstanding.
post #20 of 91
Quote:
Originally Posted by cwoloszynski View Post

The iPhone processor is probably 1W or so; this is for a new breed of laptops.

Sorry for the error, there, but still I think Apple is doing a great move here. Plus, I was evaluating this venture on the basis of the specs of PA SEMI's chips alone and Apple's current situation.

Additionally (THIS IS SEPERATE FROM THE REPLY), I don't think this is a "BLOW" to Intel; to me, that's just pure sensationalism. I personally think that Apple could still partner with Intel while still having bought out PA SEMI. Therefore, I don't think one should speculate if this will mean s step backwards for or more control from Apple. After all, we only heard that Apple just did not like Intel's Atom in this article and nothing more.
post #21 of 91
1) P.A. Semi doesn't currently have an chips for any MID or PMP listed. Their low power chip is relative to Power architecture chips. So my first thought is that Apple may want to continue with such a chip for OS X Server HW but that would kill the virtualization capabilities of Parallels and VMWare to run Windows and Linux. So that is out of the question.

2) This isn't going to be used in their desktops and notebooks, either for the reasons stated above. Plus, unlike the PPC days of yore Intel is doing a great job of pushing innovation and if they falter there will are other x86 manufacturer to take up the slack. The consumer line is not going back to PPC.

3) I wonder if this is the company that was upset when Apple chose Intel and made claims that Apple was in heavy talks with them and had a more efficient and powerful chip. If so, this buyout could be in lieu of a lawsuit.

4) While they don't have any mobile chis listed, they do have staff familiar with StrongARM, and it would seem a very knowledge and experienced staff. This does lay credence to more powerful iDevices being considered by Apple. Since StrongARM and ARM are not fully compatible this would make it harder for hackers to port Mobile OS X to other ARM devices when the average smartphone gets on par with the current iPhone.

5) As GregAlexander stated, this may allow for a more integrated device. While the iPhone is probably one of the most integrated devices in its class there are still many places it can be refined. Can the work they've done on making a more efficient Power cross over to ARM or StrongARM development?

6) Could this the first job that Apple's new Acquisitions Lawyer has worked on?

Quote:
Originally Posted by huntercr View Post

No, no, you're missing the point. Apple is buying them for their brain power, chip design facilities, etc. They're not going to let the business continue to operate. They're raiding business for the people and the property. The company will do custom design and research for Apple.

I see no reason why they won't keep the facility open. Apple has been very efficient in their R&D spending. Perhaps Apple finally feels that they are in a position to add chip design to their ecosystem, especially with their integrated, mobile platforms.

Quote:
I don't see this as a blow to Intel either. Intel just doesn't have what they need right now. You can't pin your hopes on something that may not be delivered when you need it. Apple was stuck in that position with IBM when they started blowing off Apple's G5 needs.

Intel always has AMD right up their SouthBridge. While AMD has had a rough couple years keeping up with Intel, they are not so far behind that Intel can rest on their laurels. Plus, they still sell their chips at a lower pricepoint and have a fan-base as loyal as Apple. If need be, Apple can switch from Intel to AMD without much effort and Intel knows it. Not to mention that a move away from x86 would hurt business as loss of the option to dual boot Windows or use virtualization is important to many switchers, even though they don't use it.
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post #22 of 91
Quote:
Originally Posted by webmail View Post

Just to be clear before the rumors go crazy....

This is NOT because of iPhones & iPods (could be an extra reason)
This is NOT for desktop macs (mostly)

This IS for new computing device, aka the "tablet pda" style device that has long been rumored.

At least this is what I've heard.

Oh, just shut up. This is just awesome, we can revive the Powerbook G5 next tuesday rumours!

/Adrian
post #23 of 91
Quote:
Originally Posted by Maestro64 View Post

They are very few SEMI companies these days that own their own foundries. Most are fab-less these days that is nothing new.

Like I said there is other ways to get what you need from a Semi Company without buying it. All this is going to do is diver money and resources away from what Apple does well. Also since company is fab-less that means Apple now has to compete for fab time and Apple will be a small player in a very large market. Even big guy in fab-less SEMI have capacity issues with the big foundries out there. Foundry time is given to the highest margin products.

They could be buying the people, but if your a SEMI person why would you want to work for Systems company, the good people will leave because they will want to work on the next great great thing not what apple think is in their best interest.

Plus it creates a threat with other SEMI supplier who will be less than willing to share ideas because they are afraid those ideas might get used internally. Motorola shed its semi business for this exact reason, Other SEMI company did not want to work with them because they lost out too many times to Motorola's own internal SEMI business units.

Even IBM has shed some of it SEMI business for similar reasons.

It will be interesting to hear the reason has why they felt they needed to own a SEMI business.

As I said in the duplicate thread, my guess is that they are buying IP and designers that they will use in partnership with someone like Samsung or Intel...licensing in order to gain a cost and schedule advantage over competitors.

I think it's unlikely they'll go the Sun route and design chips for an external fab to build for them.

All in all I think its a good move for Apple.
post #24 of 91
Quote:
Originally Posted by huntercr View Post

No, no, you're missing the point. Apple is buying them for their brain power, chip design facilities, etc. They're not going to let the business continue to operate. They're raiding business for the people and the property. The company will do custom design and research for Apple.

I don't see this as a blow to Intel either. Intel just doesn't have what they need right now. You can't pin your hopes on something that may not be delivered when you need it. Apple was stuck in that position with IBM when they started blowing off Apple's G5 needs.

Bingo!

This is similar to the FingerWorks acquisition to get MultiTouch.

At the very least, Apple gets a proven, talented, team that can negotiate/influence Intel and other chip mfgrs. to produce what Apple needs.

If the chips can be manufactured in quantity, and meet Apple's needs better than other chips... "Damn the torpedos..."

OS X and all of Apple's apps (except Pro Apps) and most 3rd-party apps already run on this architecture so Apple can use this chip (if available) on anything including iPods, iPhones, AirPorts, AppleTVs, Minis, Tablets, Portables, Desktops, Mac Pros (multiple chips), servers, routers, whatever.

The I/O capability of this chip is amazing.

Hmmm.... what kind of small, portable, quiet, low-power, hi-I/O devices running OS X could Apple be planning?

Also, since Apple will now be licensed to manufacture chips with the IBM PPC instruction set, who's to say that they can't contract others to do the actual manufacturing... say, maybe... Oh Intel?
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post #25 of 91


"Swipe" up to 9 docks!
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post #26 of 91
Quote:
Originally Posted by cwoloszynski View Post

The iPhone processor is probably 1W or so; this is for a new breed of laptops. I think now that OSX is ready for multiple architectures, Apple is leveraging this to keep ahead of one-processor competitors.

You are correct, a 5-13W chips is not for the iPhone, but neither is the 2GHz speed that is quoted. Their current product has no bearing on Apple's current product line. Apple would have to make a completely new device, or more likely, P.A. Semi would have to create an entirely new chip.
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post #27 of 91
Quote:
Originally Posted by webmail View Post

This IS for new computing device, aka the "tablet pda" style device that has long been rumored.

At least this is what I've heard.

I was told "think knowledge navigator + iphone + crack = "

By whom? That pda is called "the iPhone" by the way. Let's be clear about that. A pda and a tablet are not the same product.
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post #28 of 91
Quote:
Originally Posted by Ireland View Post

<image>


I wondered how long it would take to get you to post another iTablet pic on this thread.
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post #29 of 91
Quote:
Originally Posted by Olternaut View Post

Yes but........
With Apple buying this company just now will they be able to come out with such a wonderous product by at least ............Macworld 09?? \

I was thinking if this deal is going public now they could have been working on products ages ago, but signed a NDA well before this.
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post #30 of 91
Quote:
Originally Posted by solipsism View Post


I wondered how long it would take to get you to post another iTablet pic on this thread.

But that's not an iTablet, it's a Mac touch!
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post #31 of 91
It's the G7!

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post #32 of 91
Quote:
Originally Posted by Maestro64 View Post

Ok this is about the dumbest idea they could have done. They are not in the Semi business, this is just going to drag them down.

Companies need to focus on what they do well, and Apple does not do SEMI well. I can see having a controlling interest or making investments to ensure your ideal are heard and solutions are provided but owning and operating it will only burn resources that could be used else where.

Yeah, you're right, for instance they co-founded ARM and we all know what a disaster that was.
post #33 of 91
Quote:
Originally Posted by Ireland View Post

But that's not an iTablet, it's a Mac touch!

Soooooooooooory.\

Can I place a cell phone on the Mac Touch can have it give me useless information? No, then i think Ill stick with the MS Surface.
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post #34 of 91
Quote:
Originally Posted by solipsism View Post

Soooooooooooory.\

Can I place a cell phone on the Mac Touch can have it give me useless information? No, then i think Ill stick with the MS Surface.

"Surface" - tables are portable too.
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post #35 of 91
Apple doesn't buy Adobe!
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post #36 of 91
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post #37 of 91
Quote:
Originally Posted by Ireland View Post

here

I thought so...
Quote:
3) I wonder if this is the company that was upset when Apple chose Intel and made claims that Apple was in heavy talks with them and had a more efficient and powerful chip. If so, this buyout could be in lieu of a lawsuit.
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post #38 of 91
Quote:
Originally Posted by GregAlexander View Post

And yet - PA Semi is designing a processor (and related technologies). It outsources the building of the technologies to other companies...
(PA Semi might have designed the "iPhone" of the cpu industry...?)

edit: And PA Semi might have just the right engineers for Apple to work on the incredibly integrated technologies of future handheld devices.

This purchase may really be Apple buying them out of a hole.. a company with a great design, compatible with PPC (which is relatively good for Apple), no customers and no cash left to make a real go of themselves.

It's possible Apple tried to buy exclusive rights to the chip, and the owners of PA Semi said why not just buy us entirely.


I think your edit statement maybe closer to the point then the rest of your post. I have a feeling it's less about a processor and more about getting staff to help design/prototype future handheld/consumer devices. Apple needs people, not processors and this may be their way of getting those people.

Quote:
Originally Posted by Huntercr

No, no, you're missing the point. Apple is buying them for their brain power, chip design facilities, etc. They're not going to let the business continue to operate. They're raiding business for the people and the property. The company will do custom design and research for Apple.

I think you may be on the right track. It's hard to find the people. It's easy to find processors.
post #39 of 91
Quote:
Originally Posted by Ireland View Post

Apple doesn't buy Adobe!

Adobe's market cap is about $19.6 billion. Apple could not pay for them
out of petty cash the way they did PA Semi.
post #40 of 91
Quote:
Ok this is about the dumbest idea they could have done. They are not in the Semi business, this is just going to drag them down.

Not necessarily. Intel has said that Apple has really challenged them in ways they have never been challenged.

It was Apple's challenge for Intel to come up with the family of chips that is now in the MB Air and in other sub-notebooks.

Quote:
With Apple buying this company just now will they be able to come out with such a wonderous product by at least ............Macworld 09??

Its more than likely Apple and PA Semi have been working together for awhile now. Its possible this acquisition has happened right before the introduction of the product that will come from their collaboration.

Apple has done this before. Such as with Fingerworks that provided the touch screen technology.

Quote:
While they don't have any mobile chis listed, they do have staff familiar with StrongARM, and it would seem a very knowledge and experienced staff. This does lay credence to more powerful iDevices being considered by Apple. Since StrongARM and ARM are not fully compatible this would make it harder for hackers to port Mobile OS X to other ARM devices when the average smartphone gets on par with the current iPhone.

PA Semi wanted to be a major PC chip provider like Intel and AMD. They also wanted to provide these chips for Apple.

I would imagine since Apple going Intel, secretly both parties began going in a different direction. The company prides itself on producing energy saving chips. That is a paramount feature mobile devices need.
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