So Apple Bought A Chip Designer. Now What?

Apple has agreed to part with $278-million to buy PA Semi, a microprocessor design company in Palo Alto, California. Palo Alto Semiconductor, anyone?

What do they design? Computer chips. What kind? PowerPC chips, the same family that Apple ditched two years ago to switch to Intel inside.

Specifically, PA Semi designs low power chips. That and the PowerPC tie in, and the company’s lucrative government business sent the rumor mills into a death spin.

The headlines and speculation roared long and loud. Apple plans to bring back the PowerPC. Apple plans to ditch Intel for future iPhone chips. It was easy to see where the rumors came from and where they were headed.

Among many other chips, PA Semi designs and markets the PWRficient processor which is a very low power PowerPC chip. Remember IBM’s honkin’ G5’s? Same family, minus a few hundred watts of power.

It’s easy to see why the rumor mongers turned out in full force, but most close analysis indicates Apple isn’t going to do much of what the headlines screamed Apple might do.

Apple won’t dump Intel. Apple won’t make their own PowerPC chips (though one wonders what they’ll do with the nearly $20-billion they have in the bank). It’s even unlikely that Apple will use PA Semi to make the CPU for future iPhones or other handheld wireless devices.

Whatever the plans, the current line of PA Semi chips, while capable, fast, and power efficient, still don’t compete with Intel’s new and highly touted Atom line of chips for being stingy with power.

Apple’s got Intel inside the Mac, AppleTV, and what else? Aha. The iPhone doesn’t have Intel inside.

Ditto for the iPhone touch, the beginnings of Apple’s future line of handheld and mini devices. The PA Semi chips use too much power for such devices.

The problem here is what Apple means when it does something. Do they want what PA Semi has now, a suite of PowerPC-like chips? Or, do they want what PA Semi really has—an elite team of brilliant chip designers who can help Apple further differentiate future products with clever chip designs and functions?

Apple isn’t in the habit of buying something for the here and now. They want the next great thing, even if they have to create it themselves from the ground up, including a bunch of the chips.

The question of the day is simple. What will Apple do with a team of brilliant chip designers? What functions would be incorporated into Apple’s chipset designs of the future?