Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
EE Times-Asia > Controls/MCUs

Apple ventures into the IC world

Posted: 29 Apr 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Apple IC entry? IC industry? CPU?

Apple Inc. has acquired embedded PowerPC designer PA Semi Inc. for a reported $278 million last week without saying a word to investors or even PA Semi's customers about what it has in mind for the low-power-processor startup.

The industry was abuzz with speculation about Apple's silicon motives. All sides agreed it will probably take a good 18 monthsa CPU development cyclebefore an answer ships inside a new Apple product.

Meanwhile, the deal may draw the ire of the U.S. Department of Defense. PA Semi's PWRficient processor is designed into the department's programs in every major branch of the armed services, said one of the startup's customers, who expects Apple will end production of the part soon.

One of the few things that is clear is that Apple is on a tear. The day after broke the PA Semi story, Apple reported a historic high in sales for its March quarter, of $7.51 billion, up 43 percent over the like period a year ago, and quarterly profit hit $770 million.

Apple shipped 2.28 million Macs in the quarter, up 51 percent from a year earlier and more than three times the growth rate of its PC competitors. It also shipped 10.6 million iPods (up just 1 percent) and topped Wal-Mart as the largest U.S. music retailer (via iTunes). It sold 1.7 million iPhones in the quarter, and chief operation officer Tim Cook assured investors the company is on track to bring the total to 10 million for 2008.

Even at a reported $278 milliona sizable chunk of changethe PA Semi acquisition shapes up as small potatoes for an organization building out its infrastructure for growth.

"We're thrilled to have generated $4 billion in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 billion," said Peter Oppenheimer, Apple's chief financial officer. He predicted revenue would be up 32 percent in the June quarter.

In a conference call with Wall Street analysts, Apple declined to discuss the PA Semi deal.

IC preparation
Richard Doherty, principal of market watcher Envisioneering Group, said Apple needs to beef up its silicon expertise to keep pace with its growth and widen its technology edge over competitors such as Hewlett-Packard and Sony. With an in-house chip design team, Apple would not have to disclose as many details about its product plans to outside chip companies, Doherty said. In addition, products such as the Mac Mini, Apple TV and Mac Pro are all in need of a refreshing and could benefit from proprietary silicon to handle digital media.

"There are 100 flavors of video out there, and they want them all to look good on Apple products," Doherty said.

Apple has used off-the-shelf chips for its most recent products, including the Macbook Air, Apple TV and Time Capsule, said David Carey, president of Portelligent, a division of EE Times publisher TechInsights.

"Except for the iPhone, we haven't seen much evidence of Apple having much influence on IC design lately," said Carey. "One possibility is that Apple could use a crack internal processor design group as leverage over major suppliers such as Intel and Samsung." The latter company supplies the CPU for the iPhone and iPod Touch.

On Apr. 21, PA Semi informed its customers it was being acquired and could no longer guarantee supplies of its chips. The startup said the acquiring company was not interested in its products or road map but had purchased the 150-person company for its intellectual property and talent. PA Semi did not identify Apple but said the acquiring company might be willing to supply the chips on an end-of-life basis, if it could successfully transfer a third-party license to the technology.

The license in question is probably a PowerPC architectural license PA Semi has with IBM Corp. that lets the startup design its own PowerPC chips from scratch. No one from IBM was immediately available for comment.

PA Semi won kudos when it launched its PA6T-1682M in February 2007 because the dual-core 64bit PowerPC variant consumed as little as 15W while running at up to 2GHz. Cards using the chip delivered far greater performance than competing products while shaving power consumption by up to 30 percent.

Hat trick
The milestone marked a hat trick for founder Dan Dobberpuhl, who led teams that brought both ARM and MIPS architectures to new lows in power consumption. At Digital Equipment Corp., Dobberpuhl helped design the StrongARM chip, which eventually became Intel's Xscale processor. Later, he launched SiByte, which created a low-power MIPS processor acquired by Broadcom.

Insiders say PA Semi initially hoped its low-power PowerPC chips would get designed into Apple notebooks. Those hopes were dashed when Apple abandoned the PowerPC for Intel processors, a shift that forced the startup to seek sockets in embedded systems.

Although the PA Semi parts have made inroads in military and aerospace markets, volumes may not have been adequate to satisfy investors. Only a company with Apple's size and growth rate could justify spending so much on an acquisition of IP and talent.

The move has set PA Semi's customers on edge. "We've had customers saying they are going to the DOD on this one," said a source at a company that makes embedded computer boards with the processor.

The source said he was aware of more than 10 defense systems using the PWRficient CPU and that one had recently forecast it would use 70,000 of the chips over the next 10 years. The board company expected it would sell $100 million in products based on PA Semi chips over the next four years.

"I've never seen such fast adoption of a product in the mil/aero world," said the source, who asked not to be identified.

Kent Dahlgren, CEO of bridging IP specialist Praesum Communications, said his company had worked with PA Semi to develop FPGA-based bridging solutions between RapidIO and other interfaces. Dahlgren said several designs in military and wireless-infrastructure markets had been canceled within a few hours of the PA Semi acquisition news.

"Even if the Defense Department blocks the deal, the circle of trust between PA Semi and its customers is gone," Dahlgren said, adding that several contracts involving military OEMs were now in jeopardy.

"Steve Jobs has just done Freescale the biggest favor in the world, since the PA architecture largely displaced Free- scale's PowerPC," Dahlgren said.

"It seems wrong to take [the startup's products] off the market at this phase of the game, though it wouldn't be the first time an OEM has taken a chip or software company off the market," said Loring Wirbel, director of the EE Times market intelligence unit. "Cisco is a repeat offender."

- Rick Merritt
EE Times

Article Comments - Apple ventures into the IC world
*? You can enter [0] more charecters.
*Verify code:


Visit Asia Webinars to learn about the latest in technology and get practical design tips.

Back to Top