Apple’s Component Strategy Shifts

Apple (AAPL) just bought a 150-person chip company, P. A. Semi, to get its own low-power microprocessor design capabilities in-house.

Dean Takahashi does a good analysis over at VentureBeat, saying that this must be for some new product, not the iPhone. Om Malik chimes in to say that this would pose a problem for Intel’s Atom chip. More on Intel's (INTC) woes around this decision is available at Ars Technica.

As you know, I have been covering the convergence device component ecosystem at quite a bit of depth, and my primary reaction to this announcement is a very mixed feeling.

I am not concerned about Intel so much, as I am concerned about Apple itself, and its ability to manage this additional level of complexity that one more layer of vertical integration brings on.

Yes, I see the advantages: A new ultra low-power, ultra-high performance processor is needed to sustain the needs of the new category of devices that will replace laptops, integrate cell-phones, but will, at the same time, be powerful miniature multi-core computers. Apple wants to own the brains of this product, and not have to share.

Very well, if all goes well. But Apple has introduced great risk in its execution abilities.

Meanwhile, Intel should go talk to HP (HPQ) and DELL (DELL), both of whom need competing products in this category, and better get their acts together.

Comments

[xyz2099]

This is a decision that most companies would love to be able to make. It insures supply chains that are reliable, cost effective, and aminable to specific needs. The large cash supply allows apple to do this without any debt on its books. Great company, great future.

[uncle]

I think everyone is missing the what Apple has just bought. I don't believe it's about another shift back to the PowerPC but rather they just rolled 150 very smart engineers well versed in low power management. This acquisition is more about software optimization and less about chip design (from Apple's point of view) -

Having said this it still remains possible that we see a chip of this design in future iPods and iPod Touch models where cross platform compatibility is not an issue.

Lastly, $300M is a drop in the bucket for a well placed design team. I for one look forward to seeing what comes of this acquisition....