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Apple buys firm that makes tiny, powerful chips

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pasemi If you’re going to be building super popular phones and digital media players, why not use all your own parts, right?

That’s Apple’s thinking, apparently, as Forbes has uncovered a recent deal to purchase a fabless semiconductor company called P.A. Semi to the tune of some $278 million, according to sources inside Apple.

The decision to center the iPhone design around a chip that Apple could own marks a significant strategic choice by Apple Chief Executive Steve Jobs, and is aimed at ensuring Apple can continue to differentiate its flagship phone as a raft of competitors flood the market. According to a source affiliated with the chip company, Jobs and Senior Vice President Tony Fadell led the tiny group of executives who spearheaded the acquisition, which included negotiations that took place in Jobs’ home.

Apple’s choice is a blow for chip maker Intel, which has been trying to convince Cupertino, Calif.-based Apple to rely on Intel’s chips–particularly its latest low-power line up, called Atom.

P. A. Semi’s products won’t likely make their way into Apple products for about a year. The chips are apparently pretty powerful, yet consume very little power. This is a good business move for Apple, too, because it’ll be able to protect its relatively fat profit margins by using its own parts and it’ll theoretically be harder for competitors to clone Apple’s devices if they’re unable to use the same chips.

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