Why Apple Bought Anobit

Apple finally confirmed earlier reports that it bought Israeli semiconductor startup Anobit Technologies. Apple did not confirm the price, which is believed to be between $400 million and $500 million.

Apple bought Anobit for two reasons: its flash memory controllers are a key component of all Apple’s leading products (from iPads and iPhones to MacBook Airs), and in one fell swoop it just added a large team of chip engineers to payroll. Do not underestimate how important those chip engineers are. Apple had at least 1,000 chip engineers. Roughly 160 of Anobit’s 200 employees are also engineers, thus they instantly represent more than 10 percent of the total number of chip engineers at Apple.

Anobit is a fabless semiconductor company based in Israel which makes a key component that improves the performance of NAND flash memory chips, which are used in iPhones, iPads, and iPods. As Robin wrote when the rumors first surfaced:

Anobit provides flash storage solutions for enterprise and mobile markets, based on its proprietaryMSP (which stands for ‘Memory Signal Processing’) technology. Its solutions are designed to improve the speed, endurance and performance of flash storage systems while driving down the cost.

Anobit’s technology is comprised of signal processing algorithms that compensate for physical limitations of NAND flash, the company claims.

Flash memory is a crucial piece of Apple’s technology puzzle. Apple has been moving away from hard drives for years, starting with the iPod, then the iPhone, the iPad, and now it’s MacBook Air laptops. None of these computers have hard drives. They’ve all been replaced by flash memory chips. Removing the hard drive is what allows these devices to be so thin, assume any form factor, and run on less power. Any technology that improves the performance of flash memory, such as Anobit’s, is a critical piece of technology which Apple decided it needs to own.

But beyond the technology, just as important are the engineers that come with the purchase. Apple designs its own chips, and then farms out their manufacture to semiconductor fabrication plants around the world. So with a relatively small tam of chip designers, it’s been able to replace what it used to rely on Intel for (and before that,IBM) with its own in-house team focussed on creating chips for post-PC devices. These chips have different characteristics than the power-hungry Intel chips in PCs.

In computers, whether PCs or post-PCs, everything starts with the chips. By designing its own chips and building out a world-class chip engineering team, Apple is investing in its ability to keep creating more post-PC devices for years to come.