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US Defense Dept may balk at Apple's PA Semi buy

updated 02:05 am EDT, Mon April 28, 2008

DoD to contest Apple?

With little incentive to continue selling PowerPC-based chips, the US Department of Defense may plead its case against Apple following the announcement of the $278 million buyout of startup chipmaker PA Semi. The acquisition appears to be focused on the company's intellectual property and talent for reducing chip power consumption rather than its products, the report notes. Last week, the EETimes said that Apple may have to face the ire of the U.S. Department of Defense following its planned acquisition, as its customers expect Apple to end-of-life its current chips that are used in a wide variety of military devices.

Citing unnamed sources, the EETimes claims that PA Semi's PWRficient processor is designed into DoD programs in every major branch of the armed services and that its chips are used in more than 10 defense systems made by companies such as Lockheed Martin and Raytheon: one of its customer reportedly had plans on purchasing more than 70,000 chips over the next ten years.

"I don't know how a Lockheed Martin or a Raytheon would take the news that the part might not be available after a few months or perhaps two years," the source told the publication. "Typically, these military program last for many years," he added.

PA Semi's flagship chip is a dual-core 64-bit PowerPC variant that consumed as little as 15W while running at up to 2GHz. As Apple has already transitioned its entire Mac lineup to the x86 architecture, the focus may be on the underlying technology, development, and patents used to drastically shave power consumption.

The report claims that PA Semi's flagship chip, when introduced in February of 2007, delivered significantly greater performance than others on the market while shaving power consumption by as much as 30 percent.

Apple's focus could be on the talent on made that innovation possible, including the founder who has a long history of maximizing chips' power efficiency.

"The milestone marked a hat trick for founder Dan Dobberpuhl who led teams that brought both ARM and MIPS architectures to new lows in power consumption. At Digital Equipment Corp., Dobberpuhl helped design the StrongARM chip that eventually became the XScale processor," the EETimes wrote. "Later, he launched a startup called SiByte that created a low-power MIPs processor acquired by Broadcom."

A day before the deal was announced, PA Semi told its customers that it could no longer guarantee supplies of its chips, but that it may be willing to supply the chip on an end-of-life basis, if it could successfully transfer a third-party license, likely the IBM PowerPC license, to the technology. In the same email, P.A. Semi customers were also told that Apple was not interested in the startup's products or road map, but is buying the company for its intellectual property and engineering talent.

by MacNN Staff



  1. loudpedal

    Joined: Dec 1969



    If I were Apple, I'd set this company of as a separate profit center and continue to pump out the chips as-is for as long as the DOD will buy them. I just wouldn't plan to upgrade them at all. Government work has a lot of profit in it. The business is already established, so why cut off a source of profit. Liability and potential customer issues would be the only downside but probably worth the risk.

  1. bobolicious

    Joined: Dec 1969


    The G5 PowerBook is...

    ...finally coming... :)

  1. legacyb4

    Joined: Dec 1969


    if i were apple

    and i was really getting blocked, i'd just had the employees a huge signing bonus to move on over to my side of the fence...

  1. climacs

    Joined: Dec 1969


    I assume

    it's not enough to simply hire the company's employees/engineers, perhaps there is intellectual property which would come with the company and not necessarily with the employees.

    If they simply want the brains and DoD blocks the sale, then there's nothing they could do to stop them from simply hiring the engineers and paying them a HUGE signing bonus... right?

  1. MisterMe

    Joined: Dec 1969


    rumors from other sources

    The EETimes rumor has been reprinted by others elsewhere. To wit, Apple buys PA Semiconductor, but has no intention of continuing its products. The story makes no more sense now than when it was first printed. It makes no sense on several levels.

    The first is obvious in the title of this story: the Defense Department will object. Why would Apple want to kill a significant component used defense hardware? Why would the DoD allow it to kill the products even if Apple wanted to?

    The second is that Apple has no interest in PA Semi's product line. While there can be no doubt that Apple has reaped enormous benefits from switching its personal computers from the PPC to Intel x86 processors, Apple probably would never have made the move if IBM and Freescale had low-power chips in the pipeline. Despite its benefits, the x86 also has problems. These are why the x86 is virtually non-existent in the high-end embedded processor space, one which the PPC dominates. The Big 3 game consoles are based on derivatives of the PPC. My Xerox Phaser printers use the PPC. Apple continues to expand its line of intelligent products beyond its personal computers. These products are based OS X and OS X runs on the PPC.

    If Apple does not want the PA Semi's products, then how is it less expensive to buy the company rather than to license the IP that Apple wants?

  1. ZinkDifferent

    Joined: Dec 1969



    "...then how is it less expensive to buy the company rather than to license the IP that Apple wants?"

    ...because if they just license the technology, it would still be available to competitors - if they own the company, they decide who gets the products and IP (in this case, no one but Apple).

    "It makes no sense on several levels."

    It actually makes sense on every single level, if you know what's actually going on.

  1. Athens

    Joined: Dec 1969



    I don't think it was every a issue of power with the chips from IBM, I really think it was production problems and the Power issues was just a excuse. Lets face it, IBM had problems with supply and demand. They could never produce enough chips fast enough for Apple. Apple would release a product then it would be 3 months before it hit the stores as Apple had to wait for chips from IBM and then there was supply issues as IBM could not keep up.

  1. amper

    Joined: Dec 1969




    Why would Apple want to kill a significant component used defense hardware?

    Well, maybe Steve Jobs doesn't want to support a war machine that can so easily be twisted to nefarious ends, as we've seen in the last five years. Maybe Apple really wants the IP and talent of the company, but has no interest in diluting their company focus on unrelated business models.


    Why would the DoD allow it to kill the products even if Apple wanted to?

    Well, of course it wouldn't. The War Department will simply raise "national security" objections with the Department of Commerce, and the deal will be scrapped unless Apple agrees to either continue to manufacture the needed parts, or spins off the parts into a separate company.

    The government can't force Apple to continue manufacturing these parts, but it can block the sale of the company. Steve Jobs is a fairly smart person, and likely understood this problem well before any public announcement of the deal was announced.

  1. chaaalie

    Joined: Dec 1969


    licese the tech to dod

    There is no reason that Apple couldn't agree to license the tech for the DOD-needed chips to another contractor ... and still make money off of it. They don't have to make the chip itself ...

  1. climacs

    Joined: Dec 1969



    Yes, Jobs is a staunch Democrat, but I really, really doubt he is more interested in anti-war posturing than making the best decisions possible for Apple. As a shareholder and fellow Democrat, I sure hope that is the case.

    I am also certain Apple will find a way to finesse the DoD concerns so that they continue to get their chips and Apple gets the IP they paid for.

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