Apple Computer, Freescale Enter Into Purchase Agreement (UPDATE)

by , 5:55 PM EDT, August 26th, 2005

Apple Computer said Friday that it entered into a purchase agreement with Freescale Semiconductor Inc., manufacturers of the PowerPC processor.

Apple said in a filing with the Securities and Exchange Commission that under the terms of the agreement, Freescale must supply its microprocessors for orders placed by Apple through Dec. 31, 2008 -- full year after the date when the company plans to move its Macintosh computer line from PowerPC to Intel processor.

Apple said in the filing it is "under no obligation to purchase Freescale microprocessors" other than those on which work was in progress when the agreement was signed.

Apple announced in June it would switch to the Intel processor from the Power PC chip beginning in 2006. Freescale is formerly Motorola's processor unit.

The deal with Freescale doesn't necessarily imply that it is delaying the move to Intel processors, but that it might take longer than expected and Apple is making sure it will have a sufficient supply of processors to continue meeting demand.

Apple spokesman Steve Dowling declined to comment to The Street.com on why Apple signed the new purchase agreement with Freescale, but he said the company has not changed its plans to start delivering Intel-based Macs by "this time" next year or its schedule to complete the transition to Intel processors by the end of 2007. Intel spokesman Chuck Malloy declined to comment on Freescale's deal with Apple or whether any problems have arisen in Intel's own relationship with Apple, but said there has been no change in Apple and Intel's plans to deliver an Intel-powered Macintosh by June of next year.