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More Insight on Apple and P.A. Semi

More Insight on Apple and P.A. Semi

by , 4:05 PM EDT, April 24th, 2008

Just what Apple is up to with the P.A. Semi acquisition is causing heated debate. It's actually the low power technologies that the company has worked on according to Tim Beyers at The Motley Fool on Thursday.

After recapping Apple's earnings and the apparent contradiction concerning the fact that the P.A. Semi designs are related to the PowerPC, Mr. Beyers got to the core of the story.

First, one of the co-founders of P.A. Semi is CEO Dan Dobberpuhl who was a lead designer for Digital Equipment Corporation's (DEC) ultra-fast [RISC] Alpha chip and StrongARM microprocessor.

"See the pattern emerging here?" Mr. Beyers asked. "Apple has a history of investing in low-power chip designs that have paradigm-busting potential. P.A. Semi's team has a history of producing ... low-power chip designs with paradigm-busting potential."

To recap, the author cited the keys:

  • Apple has a history of teaming with or funding firms that supply low-power paradigm-busting chips, especially for new products.
  • P.A. Semi's team has experience creating efficient processors for handheld devices and set-top boxes.
  • PWRficient is a low-power paradigm-busting chip that has won industry acclaim.
  • Apple's most rebellious new products are the iPhone smartphone and Apple TV set-top box.

"That Apple would want to control the brains of its newest and most important products -- especially when the iEmpire hasn't settled on a consistent supplier for the guts of the iPod -- is to be expected," Mr. Beyers concluded. "It's logical. And if Apple's ingenuity remains intact, it may also prove to be brilliant."

Observer Comments

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Close Name:algr Posts: 296 Joined: 07 Aug 2003
Subject:

One factoid is a pattern? These analysts are getting better by the minute.

Close Name:chatalinda Posts: 13 Joined: 08 Aug 2007
Subject: PA Semi -- Bargain-basement Bargaining Chip?

Apple held Intel over the heads of IBM and Motorola. Finally, Apple played the Intel card. No one will every know how many dollars in concessions Apple wrung out of its PPC suppliers before jumping to Intel.

PA Semi's technology may simply be a bargaining chip to ward off the predations of Intel by providing Apple with leverage (against Intel) that other PC makers do not have.

Intel has committed vast resources toward the development of energy-efficient portable devices, and around 2010 plans to begin to compete in the phone market too. Intel has been willing to work with Apple precisely because Apple fits in so well with Intel's strategy of dominating portable devices as completely as it dominates in the PC world, where, by the way, it is crushing AMD.

In any case, one might consider that PA Semi's technology may also be(come) a carrot Apple holds out to Intel -- in exchange for some yet-to-be-determined concessions from Intel. Intel is a beast (which is why I own some shares), but it cannot be all things to all customers, particularly Apple, which has built its franchise by differentiating itself in the market from commodity players.

In other words, the relevant questions may well be -- Does PA Semi's know-how offer Apple entree into markets or products not served by Intel? Or does PA Semi's technology offer something Apple can bring to the table with Intel in order to create (Intel/PA-Inside) products that commodity-based competitors cannot easily match?

In short, my guess is that PA Semi will serve a dual purpose -- to be used by Apply against Intel, and simultaneously used by Apple in cooperation with Intel against Apple's competitors.

As a bargaining chip in co-optition with Intel, PA Semi may prove to be a great bargain, even if no products ever flow from it.

Close Name:Guest
Subject: PA Semi -- Bargain-basement Bargaining Chip?

"Intel has committed vast resources toward the development of energy-efficient portable devices, and around 2010 plans to begin to compete in the phone market too."


Too funny. What you are missing here is that Intel bought the StrongArm Architecture from DEC (yes the same super fast and energy efficient designed by Dan Dobberpuhl while at DEC) and tried to make a go of it in the embedded/mobile arena for a few years. They gave up and sold it off a year or so ago. What makes you think they will magically figure out how to sell to the embedded systems space in another year. It is a far different sale than selling to PC manufacturers.

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