Apple to buy chip maker PA Semi for $278 million; US military may object to deal

24 April 2008

Apple may well have started a new relationship with Intel by using the latter's microprocessors in its iconic iMac range, but it certainly doesn't believe in putting all its eggs in one basket.

The latest news indicates that the technology major, riding a new wave of success following the tremendous response to its iPod and iPhone ranges, has decided to buy a boutique microprocessor design firm called PA Semi to service its profit-making lines.

The Santa Clara-based company, founded in 2003,  is known for its design of sophisticated, low-power chips based on the PowerPC architecture, which Apple recently abandoned for its computers in favor of Intel chips.

This acquisition will spell disappointment for Intel, which has been trying to convince Cupertino, California-based Apple to rely on Intel's chips, particularly its latest low-power line up, called Atom.

Analysts say PA Semi's chips could someday conceivably power the iPhone and iPod.

Led by CEO Paul Otellini, Intel is developing a line of chips that it believes can become as central to hand held computing devices as its "x86" or Pentium chips have been to the personal computer industry. Intel has said it aims to create somewhat different lines of Atom processors tailored to different classes of applications, such as consumer devices, low-cost notebook computers and set-top boxes. The first of these designs is slated to begin shipping by the middle of this year; another by year's end.